United States General Accounting Office GAO Report to Congressional Requesters

October 2001 FOREIGN RELATIONS Migration From Micronesian Nations Has Had Significant Impact on Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands

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GAO-02-40 Contents

Letter 1 Results in Brief 3 Background 5 Thousands of FAS Citizens Have Migrated to U.S. Island Areas Under the Compact for Employment Opportunities but Live in Poverty 10 Compact Migration Has Cost U.S. Island Areas Hundreds of Millions of Dollars, While Population Growth of the FSM and the RMI Has Slowed 16 Use of Options Available to Address Impact Has Not Satisfied U.S. Island Governments 23 Changes in Compact Assistance and Provisions Might Affect Migration Levels and Impact 30 Conclusions 33 Recommendation for Executive Action 34 Agency Comments 34

Appendix I Objectives, Scope, and Methodology 36

Appendix II FAS Migrant Population Data Collection 40

Appendix III Comments From the Department of the Interior 43

Appendix IV Comments From the Department of State 46

Appendix V Comments From the Government of the Federated States of Micronesia 50

Appendix VI Comments From the Government of the Republic of the Marshall Islands 57

Page i GAO-02-40 Micronesian Migration Appendix VII Comments From the Government of Guam 71

Appendix VIII Comments From the Government of Hawaii 79

Appendix IX Comments From the Government of the Commonwealth of the Northern Mariana Islands 100

Appendix X GAO Contacts and Staff Acknowledgments 104

Tables Table 1: FAS Migrants in Guam and Hawaii (1997) and the CNMI (1998) by When Migrated (Before or After Compact Implementation) 11 Table 2: Proportion of FAS Migrants Living Below the Poverty Level in Guam and Hawaii (1997) and the CNMI (1998) 14 Table 3: Compact Impact Estimates for Guam, Hawaii, and the CNMI, 1986-2000 17

Figures Figure 1: Location and Population of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau, as well as the U.S. Areas of Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands 6 Figure 2: Year of FAS Migrant Arrival in Guam, Hawaii, and the CNMI, pre-1980-1997/98 13

Page ii GAO-02-40 Micronesian Migration Abbreviations

CNMI Commonwealth of the Northern Mariana Islands FAS Freely Associated States FSM Federated States of Micronesia INS Immigration and Naturalization Service OIA Office of Insular Affairs RMI Republic of the Marshall Islands UN TTPI United Nations Trust Territory of the Pacific Islands

Page iii GAO-02-40 Micronesian Migration United States General Accounting Office Washington, DC 20548

October 5, 2001

The Honorable James V. Hansen Chairman Committee on Resources

The Honorable Tom Lantos Ranking Minority Member Committee on International Relations

The Honorable Jim Leach Chairman, Subcommittee on East Asia and the Pacific Committee on International Relations

The Honorable Doug Bereuter House of Representatives

The United States is party to international agreements, in the form of Compacts of Free Association, that include provisions granting the citizens of three small Pacific Island nations the right to live and work in the United States. One of these Compacts was enacted in 1986 with the Federated States of Micronesia and the Republic of the Marshall Islands, while the second Compact was implemented in 1994 with the Republic of Palau. Compact enabling legislation states that, in approving the Compacts, the Congress did not intend to cause any adverse consequences for U.S. territories, commonwealths, or the state of Hawaii. While many of the provisions of the Compact with the Federated States of Micronesia and the Republic of the Marshall Islands, including those providing U.S. economic assistance, are due to expire in 2001 and are being renegotiated, the Compact’s migration provisions do not expire.1 However, the governments of the U.S. island areas of Guam (an unincorporated U.S. territory in the western Pacific), Hawaii (a U.S. state), and the Commonwealth of the Northern Mariana Islands (a self-governing commonwealth of the United States), have raised concerns about the adverse financial and public health impact that they attribute to the many citizens from the Compact nations that have availed themselves of

1 Compact provisions related to economic assistance, access to U.S. federal services and programs, and certain of the Compact defense obligations are due to expire in 2001. These provisions can continue from the 2001 expiration date to 2003 as provided in the Compact while negotiations are under way but not completed.

Page 1 GAO-02-40 Micronesian Migration Compact migration rights.2 Therefore, the Department of State’s Director of the Office of Compact Negotiations testified in June 2000 that he intends to address migration in the context of the ongoing negotiations.3 (As of September 21, 2001, the Director of the Office of Compact Negotiations resigned. He has not yet been replaced.)

You requested that we review the migration provisions of the Compact with the Federated States of Micronesia and the Republic of the Marshall Islands in order to assist the Congress in its review of any migration proposals that may result from current Compact negotiations. In response, we (1) identified migration under the Compact (migrant population size, destinations, and characteristics), (2) assessed the impact of this migration on U.S. island areas and the sending nations,4 (3) determined the use of available options to address impact on U.S. island areas, and (4) explored ways in which future changes in Compact provisions and assistance levels might affect migration levels and impact. Our review includes data on the Republic of Palau as U.S. island area governments have included the cost of Palauan migrants in their financial impact estimates.

To meet these objectives, we reviewed the Compacts and laws that affect migration, as well as data on the number, destinations, characteristics, and impact of migrants from the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau to U.S. island areas. Although these data were collected using the best approach available, we note that the data on the number of migrants may be an undercount and are now several years old. We interviewed officials from the governments of the United States, the Federated States of Micronesia, the Republic of the Marshall Islands, the Republic of Palau, Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands regarding migration under the Compacts of Free Association and its impact. We also spoke with migrant community representatives in the three U.S. island areas.

2 We use the term “U.S. island areas” to refer collectively to Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands. We view this term as a neutral, concise reference to three locations that each have a different political status.

3 Direct economic assistance provided for in the Palau Compact does not expire until 2009, and that Compact’s migration provisions do not have an expiration date. 4 We did not include the continental United States in this report because (1) compensation for migrant impact is not available to U.S. mainland states in the Compact’s enabling legislation and (2) no data regarding the size of the Micronesian migrant population on the U.S. mainland have been available during the course of our work.

Page 2 GAO-02-40 Micronesian Migration (Further details regarding our scope and methodology are provided in app. I.) Results in Brief Thousands of citizens from the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau have availed themselves of the migration rights provided under the Compacts. Almost 14,000 migrants were living in Guam and Hawaii in 1997 and the Commonwealth of the Northern Mariana Islands in 1998, according to Department of the Interior surveys. Guam had the most Compact migrants at 6,550, followed by Hawaii with 5,500 and the Commonwealth with 1,755. There were substantially more migrants living in these U.S. areas who arrived under the Compacts of Free Association than there were those who arrived prior to Compact implementation. For the migrants surveyed, the destination for migrants shifted from the Commonwealth of the Northern Mariana Islands in the early 1980s to Guam from the mid-1980s to mid-1990s, and to Hawaii in more recent years.5 Compact migrants moved to U.S. island areas primarily for employment and education opportunities and as dependents of employed migrants. The data show that Compact migrants surveyed were working in jobs that required few skills and paid low wages, and most (over 50 percent) were living in poverty in all three U.S. island areas. Finally, most Compact migrants were not highly educated.

The governments of Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands have identified significant Compact migration impact. The three U.S. areas have collectively reported at least $371 million in costs to local governments for 1986 through 2000 that are associated with migrants from the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau, with Guam’s estimate accounting for close to half of the total amount. All three U.S. island areas have shown that costs have been concentrated in the areas of health and education. Further, all three U.S. areas have raised concerns about public health problems associated with Compact migrants. Concerning impact on sending nations, population growth in the Federated States of Micronesia has essentially stopped in recent years, while falling to under 2 percent annually in the Republic of the Marshall Islands, reportedly due to out-migration. Government officials in these Micronesian countries view out-migration as a key safety valve to easing

5 Migration is, reportedly, increasingly targeted at the U.S. mainland, although there are no data to support this view.

Page 3 GAO-02-40 Micronesian Migration problems associated with limited economic opportunities in these small nations.

The U.S. government’s use of options available to address Compact migration impact has not satisfied the governments of Guam, Hawaii, or the Commonwealth of the Northern Mariana Islands. One of these options, financial compensation, has provided funding through fiscal year 2001 for Guam and the Commonwealth of the Northern Mariana Islands of $41 million and $3.8 million, respectively. These amounts are much less than the financial impact estimated by the two U.S. island governments. Hawaii has received no compensation. All three U.S. areas believe additional funding is in order. The second option, which allows for nondiscriminatory limitations to be placed on the right of Compact migrants to establish continuing residence in a territory or possession of the United States, was enacted in September 2000. U.S. government officials have reported that this action is expected to have limited impact due to insufficient resources to enforce the limitations. Compact impact reports, a tool available to assist the U.S. government in determining whether and how to address impact, have not been prepared annually by the Department of the Interior as required and do not easily allow comparisons across U.S. island area data to determine relative impact.

A reduction in the level of future Compact assistance could spur migration, while targeting assistance to health and education sectors could reduce some motivations to migrate. For example, significant reductions in aid that reduce government employment would be expected to increase migration. In contrast, targeting future U.S. assistance to the Federated States of Micronesia and the Republic of the Marshall Islands for education and health purposes might reduce some of the motivation to migrate (although migration will continue as long as employment opportunities in both countries remain limited). Further, improvements in migrant health and education status would be expected to reduce adverse migrant impact in U.S. destinations.

In this report, we are making a recommendation to the Secretary of State regarding the use of future Compact assistance for health and education to reduce adverse Compact impact in Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands.

We provided a draft of this report to the Department of the Interior, the Department of State, and the Immigration and Naturalization Service, as well as to the governments of the Federated States of Micronesia, the Republic of the Marshall Islands, the Republic of Palau, Guam, Hawaii, and

Page 4 GAO-02-40 Micronesian Migration the Commonwealth of the Northern Mariana Islands. The government of the Republic of Palau did not provide comments. The Immigration and Naturalization Service provided technical comments and generally agreed with the substance of the report. Agencies and governments that provided written comments generally agreed with our findings, but each had concerns regarding the scope and content of various issues addressed in the report. Of those who addressed our recommendation, State agreed with us, Guam and the Commonwealth stated that the recommendation should address the lack of employment in the Pacific Island nations, Hawaii proposed that health and education funding be provided only under strict grant conditions, and the Federated States of Micronesia felt that the recommendation was unnecessary. Where appropriate, we made technical changes that incorporated minor comments.

Background Located just north of the equator in the Pacific Ocean are the two island nations of the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) (see fig. 1). The FSM, which is comprised of the states of Pohnpei, Chuuk, Yap, and Kosrae, had a population of about 107,000 in 2000,6 while the RMI had a population of 50,840 in 1999, based on the most recent census data.7

6 This figure of 107,000, provided to us by the FSM Department of Foreign Affairs, is considerably lower than the 1999 population estimate of 116,268 previously provided to us by the FSM government in September 2000. The FSM Department of Economic Affairs is finalizing the FSM 2000 census results and has not yet released the exact FSM population figure. 7 The Republic of Palau, located west of the FSM, had a population of 19,129 in 2000.

Page 5 GAO-02-40 Micronesian Migration Figure 1: Location and Population of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau, as well as the U.S. Areas of Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands

Note 1: All population figures are for the year 2000, except for the 1999 Republic of the Marshall Islands figure. Note 2: Circles around each location illustrate the general vicinity of each island area. They do not correspond to territorial boundaries or exclusive economic zones.

In 1947, the United Nations created the Trust Territory of the Pacific Islands (UN TTPI). The United States entered into a trusteeship with the United Nations Security Council and became the administering authority of the four current states of the FSM, as well as the Marshall Islands, Palau, and the Northern Mariana Islands. The UN TTPI made the United States responsible financially and administratively for the region. The four states of the FSM voted in a 1978 referendum to become an independent nation, while the Marshall Islands established its constitutional

Page 6 GAO-02-40 Micronesian Migration government and declared itself a republic in 1979.8 Both locations remained subject to the authority of the United States under the trusteeship agreement until 1986. Late that year, an international agreement called the Compact of Free Association went into effect between the United States and these two new nations and provided for substantial U.S. direct economic assistance for 15 years in order to help both countries move toward a goal of economic self-sufficiency. The Department of the Interior’s Office of Insular Affairs (OIA) has been responsible for disbursing and monitoring this direct economic assistance, which totaled almost $1.6 billion from 1987 through 1998.9 In 2000 we reported that both nations have made some progress in achieving economic self-sufficiency but remain heavily financially dependent upon the United States.10 In addition to economic assistance, under the Compact the United States provided access to federal services and programs, an obligation to defend the two Pacific Island nations, and migration rights. For its part, the United States received defense rights in these two countries under the Compact.

The Compact exempts FSM and RMI citizens migrating to the United States from meeting U.S. passport, visa, and labor certification requirements of the 1952 Immigration and Nationality Act, as amended (P.L. 82-414). The same migration provisions are included in the 1994 Compact with the Republic of Palau. The migration provisions of the two Compacts also allow FSM, RMI, and Palau (or, collectively, Freely Associated States–FAS) migrants to enter into, lawfully engage in occupations, and establish residence in the United States (including all U.S. states, territories, and possessions) without limitations on their length

8 The Commonwealth’s current status is based on the Covenant to Establish a Commonwealth for the Northern Mariana Islands in Political Union with the United States. This agreement was negotiated by representatives of the United States and the Northern Mariana Islands and signed in 1975. The Covenant was signed by the President and approved by the Congress in 1976, and the first constitutional government of the Commonwealth of the Northern Mariana Islands took office in 1978. The Covenant was fully implemented in 1986. Palau was the last UN TTPI district and was administered by the United States until 1994 when its Compact of Free Association went into effect, and Palau became a sovereign state. 9 Total U.S. Compact assistance–direct funding, program assistance, and federal services– to the two countries for fiscal years 1987 through 2001 is estimated to be at least $2.6 billion.

10 See Foreign Assistance: U.S. Funds to Two Micronesian Nations Had Little Impact on Economic Development (GAO/NSIAD-00-216, Sept. 22, 2000).

Page 7 GAO-02-40 Micronesian Migration of stay.11 U.S. Immigration and Naturalization Service (INS) officials have stated that these rights granted to FAS migrants are unique; there are no other nations whose citizens enjoy this degree of access to the United States. At the time of the original negotiations, the U.S. Compact negotiator stated that the Compact’s migration rights were meant to strengthen ties between the United States and the Freely Associated States.12

All Compact migrants in the United States are legally classified as “nonimmigrants,” a status that typically signifies nonpermanent visitors such as tourists or students.13 However, while not legally classified as such, Compact migrants can behave similarly to “immigrants,” in that they can stay in the United States as long as they choose with few restrictions.14 Compact migrants can become U.S. citizens by applying for legal permanent resident status under standard immigration procedures.15

The Congress authorized compensation in the Compacts’ enabling legislation for U.S. island areas that might experience increased demands on their educational and social services by Compact migrants from these Pacific Island nations. Further, the legislation required the President to report and make recommendations annually to the Congress regarding

11 The possibility of allowing migration to the United States had been previously recommended. A 1963 U.S. government report to President Kennedy on the political, economic, and social problems faced by Micronesia noted that “it is essential that the safety valve of legally unlimited (and possibly financially-aided) immigration to the United States be established.” See A Report of the U.S. Government Survey Mission to the Trust Territory of the Pacific Islands, Solomon, Anthony V., Washington, D.C., 1963. 12 Interior noted during a hearing on the Compact in 1986 that about 4 percent of the FAS population was living in U.S. territories as students and another 3 percent was in U.S. territories as migrants, and this degree of FAS presence was not expected to change after the Compact was enacted. 13 While citizens of Compact nations who move to U.S. areas are legally classified as “nonimmigrants,” we refer to them by the commonly used term “migrants” throughout this report.

14 For example, certain aliens, including FAS migrants, may be removed from the country if they have committed certain crimes, pose a public health risk, or have become a public charge under certain circumstances. 15 Few migrants from FAS countries take action to become U.S. citizens. For example, according to INS data, 14 Palauans, 7 FSM citizens, and 1 RMI citizen became naturalized U.S. citizens in 1998.

Page 8 GAO-02-40 Micronesian Migration adverse consequences resulting from the Compact.16 The Department of the Interior’s OIA has been responsible for collecting information regarding Compact impact on U.S. island areas. Interior stated in 1989 correspondence with the government of Guam that “social services” eligible for impact compensation include public health and public safety services, and that the cost of services provided by private or nongovernment agencies are not eligible for reimbursement. In addition to authorized financial compensation, the Compact provided another option for addressing the impact of migrants: certain nondiscriminatory limitations may be placed on the rights of these migrants to remain in U.S. territories and possessions.

While Compact migrants can travel to any U.S. area (including the U.S. mainland), U.S. areas that have drawn migrants due to their close proximity are Guam, the Commonwealth of the Northern Mariana Islands (referred to as the CNMI), and the State of Hawaii. Hawaii had the largest year 2000 total population of the three U.S. island destinations, at 1,211,537, while the populations of Guam and the CNMI were 154,805 and 69,221, respectively. All three locations have opportunities in the areas of employment, education, health care, and social services that have attracted FAS migrants.

16 As of November 2000, the responsibility for preparing impact reports has shifted from the President (with the Department of the Interior as the responsible agency) to the governors of the affected U.S. island areas.

Page 9 GAO-02-40 Micronesian Migration Thousands of FAS Since the two Compacts were enacted, thousands of FAS citizens have migrated to U.S. island areas in the Pacific. According to the 1997 and 1998 Citizens Have OIA surveys,17 Guam had the highest number of Compact migrants at 6,550, Migrated to U.S. followed by Hawaii and the CNMI. 18 For those surveyed, the destination for migrants shifted from the CNMI prior to 1985 to Guam over the next Island Areas Under decade, shifting to Hawaii in the mid-1990s (and now, reportedly, to the the Compact for U.S. mainland). It is primarily for employment opportunities that migrants have been moving to U.S. areas, with more dependent family members of Employment employed workers migrating since implementation of the Compacts. Opportunities but Educational opportunities have also served as a motivation to migrate. The majority of migrants were living in poverty in all three U.S. areas, with the Live in Poverty CNMI having the lowest migrant poverty rates. Of note, the CNMI had the highest percentage of working age FAS migrants participating in the labor force at over 65 percent. In the three U.S. areas, many Compact migrants were working in jobs that required few skills and paid low wages, such as cleaning or food services. In addition, Compact migrants surveyed were not highly educated, with few having college degrees and just over 50 percent having graduated from high school.

Almost 14,000 Compact Thousands of FAS citizens have moved to U.S. areas in the Pacific under Migrants Were Living in the Compacts, with the highest number of Compact migrants living in U.S. Island Areas by Guam. According to OIA surveys, about 6,550 and 5,500 Compact migrants 1997/98 were living in Guam and Hawaii, respectively, in 1997, while 1,755 were living in the CNMI in 1998 (see table 1). This sums to more than 13,800 persons--far more than the 2,500 migrants living in these three U.S. areas

17 See The Status of Micronesian Migrants in 1998: A Study of the Impact of the Compacts of Free Association Based on Censuses of Micronesian Migrants to Hawaii, Guam, and the Commonwealth of the Northern Mariana (Rev.) (Washington, D.C.: U.S. Department of the Interior, Office of Insular Affairs, Jan. 15, 1999). While similar surveys identifying Micronesian migrants were undertaken for U.S. island areas for 1992 and 1993, this report focuses on the most recent data contained in the report cited above. These data were collected in 1997 (for Guam and Hawaii) and 1998 (for the CNMI). Moreover, these data represent a “snapshot” of the FAS migrant communities living in Guam and Hawaii in 1997 and the CNMI in 1998. These data do not represent all FAS migrants who ever lived in a U.S. island area, as some may have moved elsewhere by the time of the survey and may have different characteristics than migrants who remained in U.S. areas. 18 Throughout this data discussion, we use the term “Compact” migrants to refer to migrants who moved to U.S. areas after implementation of the Compacts, while we use the term “pre-Compact” migrants to identify those migrants who moved to U.S. areas prior to the Compacts. When referring to all migrants, regardless of when they moved to a U.S. area, we use the term “FAS” migrants. Of note, the term “Compact” migrant also includes all U.S.-born children (who are, thus, U.S. citizens by birth) of all migrants unless otherwise noted.

Page 10 GAO-02-40 Micronesian Migration who arrived prior to the Compacts. FAS migrants, which include those who arrived prior and subsequent to implementation of the Compacts, accounted for about 5 percent of Guam’s total population and around 4 percent of the CNMI’s total population. In contrast, they accounted for only 0.5 percent of Hawaii’s total population. There were substantially fewer Palauans living in the CNMI in 1998 who came during the Palau Compact period (1995-1998) than there were those who arrived prior to the Compact. In addition, while there are very few pre-Compact or Compact Marshallese migrants living in either Guam or the CNMI, more than 35 percent of all Compact migrants living in Hawaii were Marshallese in 1997. Forty percent of all FAS migrants in U.S. island areas at the time of the surveys were born in the FSM state of Chuuk, the poorest state in the FSM. These data may be an undercount of FAS migrants due to the methodology used to collect the information (see app. II).

Table 1: FAS Migrants in Guam and Hawaii (1997) and the CNMI (1998) by When Migrated (Before or After Compact Implementation)

Total (all Guam (1997) Hawaii (1997) CNMI (1998) U.S. areas) Migrant group FSM RMI Palau Total FSM RMI Palau Total FSM RMI Palau Total Pre-Compact 270 2 458 730 232 185 193 610 289 18 885 1,192 2,532 Compact 6,325 123 102 6,550 3,312 2,070 127 5,509 1,503 74 178 1,755 13,814 - Adult and Child Migrants 5,254 105 87 5,446 2,853 1,839 123 4,815 995 43 146 1,184 11,445 - U.S.-born Children of Migrants 1,071 18 15 1,104 459 231 4 694 508 31 32 571 2,369 Total 6,595 125 560 7,280 3,544 2,255 320 6,119 1,792 92 1,063 2,947 16,346

Note 1: “Pre-Compact” migrants include all FAS citizens, adults and children, who moved to Guam, Hawaii, and the CNMI prior to the implementation of the Compacts (1986 or earlier for the FSM and the RMI, 1994 or earlier for Palau). “Compact” migrants include (1) all FAS citizens, adults and children, who moved to Guam, Hawaii, and the CNMI after the implementation of the Compacts and (2) all children who were not born in a FAS state (according to the survey administrator, almost all of these children were born in the United States) and who have at least one FAS-born migrant parent. All these children of FAS migrants are included in this category whether their parents migrated to a U.S. area before or after the Compacts were implemented, because it is often difficult to determine their status. For example, if a child has one FAS parent who migrated prior to a Compact’s implementation and another parent who migrated after a Compact was implemented, it is difficult to determine how to categorize this child. OIA accepts this group of children as part of the FAS population who are in U.S. areas as a result of the Compact. Note 2: These data, as well as data presented in all tables and figures in this section, represent a “snapshot” of the FAS migrant communities living in Guam and Hawaii in 1997 and the CNMI in 1998. These data do not represent all FAS migrants who ever lived in a U.S. island area, as some of these migrants may have moved elsewhere by the time of the survey and may have different characteristics than migrants who remained in U.S. areas.

Page 11 GAO-02-40 Micronesian Migration Source: The Status of Micronesian Migrants in 1998: A Study of the Impact of the Compacts of Free Association Based on Censuses of Micronesian Migrants to Hawaii, Guam, and the Commonwealth of the Northern Mariana Islands (Rev.) (Washington, D.C.: U.S. Department of the Interior, Office of Insular Affairs, Jan. 15, 1999).

FAS Migrant Destinations OIA 1997 and 1998 data show that FAS migrants surveyed migrated to Shifted From the CNMI to Guam, Hawaii, and the CNMI at different points in time. As shown in table Guam to Hawaii 1, the CNMI had the highest number of combined pre-Compact migrants from the FSM, the RMI, and Palau present in 1998 (1,192, compared to 730 for Guam and 610 for Hawaii). At the time of the OIA surveys in 1997 and 1998, the CNMI had received and retained slightly more migrants from the FSM, the RMI, and Palau (combined) for several years prior to 1985. The destinations of migrants from the FSM, the RMI, and Palau then shifted, with substantially more migrating to Guam over the next decade, then shifting to Hawaii in the mid 1990s (see fig. 2). Of note, migration flows under the Compacts appear to have followed traditional migration patterns, with young males migrating first for employment, followed by migration of family members.

Page 12 GAO-02-40 Micronesian Migration Figure 2: Year of FAS Migrant Arrival in Guam, Hawaii, and the CNMI, pre-1980-1997/98

Source: The Status of Micronesian Migrants in 1998 (Rev.), Jan. 15, 1999.

FAS Migrants Came Employment was the key reason cited by FAS migrants in the 1997 and Largely for Employment 1998 OIA surveys for coming to Guam and the CNMI, totaling about and Education 40 percent for each (totaling more than 3,500 migrants). Migrants from the Opportunities, and as FSM and the RMI explained to us that they moved to the U.S. areas to find a job, given the lack of employment opportunities at home. In addition, Dependents over 20 percent of FAS citizens moved to Guam and the CNMI as dependents. In Hawaii, FAS migrants also chose employment and being dependents of an employed worker as key reasons for migrating (at 15 percent and 11 percent, respectively) as well as medical care (at 6 percent)

Page 13 GAO-02-40 Micronesian Migration in the OIA survey.19 However, a greater proportion of RMI migrants in Hawaii came for medical reasons (10 percent) than for employment (7 percent). Educational opportunities at both the college and high school levels have also served as motivations for migration, according to interviews with migrant communities and FAS officials in the three U.S. areas. The University of Hawaii has provided data to us showing that FAS student enrollment had risen since the Compacts were implemented. Specifically, FAS student enrollment in the University of Hawaii increased from 54 students in 1986 to 292 students in 1999.

FAS Migrants Live in There were considerable differences in poverty rates and employment Poverty; Almost Half Were levels between the three U.S. island areas and among the migrant groups. Employed but Had Low For example, the CNMI had the lowest rate of FAS migrants living in Skill Jobs poverty, at about 51 percent, compared to 67 percent in Guam (see table 2). Poverty rates were generally higher for Compact migrants than they were for migrants that arrived prior to the Compacts.20

Table 2: Proportion of FAS Migrants Living Below the Poverty Level in Guam and Hawaii (1997) and the CNMI (1998)

Guam (1997) Hawaii (1997) CNMI (1998) Migrant group FSM RMI Palau Total FSM RMI Palau Total FSM RMI Palau Total Pre- 61.5% 100.0% 56.8% 58.6% 31.9% 57.3% 25.4% 37.5% 52.9% 38.9% 38.4% 41.9% Compact (166) (2) (260) (428) (74) (106) (49) (229) (153) (7) (340) (500) Compact 67.3 91.9 59.8 67.8 54.6 71.9 44.1 60.9 58.5 58.1 47.8 57.4 (4,258) (113) (61) (4,432) (1,810) (1,489) (56) (3,355) (880) (43) (85) (1,008) Total 67.1% 92.0% 57.3% 66.8% 53.2% 70.7% 32.8% 58.6% 57.6% 54.3% 40.0% 51.2% (4,424) (115) (321) (4,860) (1,884) (1,595) (105) (3,584) (1,033) (50) (425) (1,508) Note: The numbers in parentheses represent the actual number of migrants living in poverty at the time of the surveys, whereas the percentages represent the proportion of migrants living in poverty at the time of the surveys. Source: The Status of Micronesian Migrants in 1998, Jan. 5, 1999.

19 It is important to note that more than 50 percent of those interviewed in Hawaii chose the “other” option for the OIA survey question regarding reasons for migrating. “Education” was not provided as an option for migrants to choose in the OIA survey instrument. While some migrants we interviewed explicitly stated that educational opportunities were their main reason for migrating, it is unknown how many of those surveyed would have chosen this answer instead of “other” in the OIA surveys, especially on Hawaii. Moreover, while the summary discussion of reasons for migrating in the OIA survey explicitly states that education was the primary reason for migration to Hawaii, we found that such a conclusion was not consistent with the underlying data of the survey. 20 Poverty levels were determined based on the U.S. nationwide standard established by the U.S. Census Bureau and adjusted annually for family size.

Page 14 GAO-02-40 Micronesian Migration Labor force participation (those able and willing to work) and employment of migrants (those actually employed) differed between the three U.S. areas. Labor force participation and employment levels were the lowest in Hawaii, with 46 percent of working-age FAS migrants in the labor force and 39 percent employed. In contrast, in the CNMI, nearly 66 percent of working-age FAS migrants reported that they were in the labor force, and nearly 60 percent were employed. Guam was in the middle, with 58 percent in the labor force and 52 percent employed.

Compact migrants who found employment in U.S. areas had primarily private sector jobs requiring few skills and paying low wages. U.S. island government officials and migrant community members told us that Compact migrants often accept jobs that local workers refuse to take.21 An official representing the garment manufacturing industry in the CNMI noted that FAS employees are good workers and are rarely absent from work. In Guam (1997), Compact migrants largely worked in retail (drinking and eating establishments), hotels and motels, and construction, according to the OIA surveys. In Hawaii (1997), Compact migrants also largely worked in retail, followed by agriculture and business services (such as cleaning). In contrast, Compact migrants in the CNMI (1998) largely worked in apparel manufacturing, followed by retail, hotels and motels, and transportation and communications.

Compact Migrants Are Not Compact migrants22 have obtained limited education, according to the 1997 Highly Educated and 1998 OIA surveys. Just over half of all Compact migrants age 25 and older had received their high school diplomas, less than 2 percent had earned 4-year college degrees, and less than 4 percent had earned 2-year community college degrees. The 1997 and 1998 OIA surveys show that

21 Government officials in Guam and migrants in the CNMI reported that locals do not want to take low-end jobs (especially jobs outside in the heat of the sun, such as landscaping jobs and construction). However, Guam government officials told us that as Guam’s unemployment rate has reached about 15 percent in recent years, the demand for FAS workers may have decreased. While CNMI officials also reported a negative change in local economic conditions, the garment manufacturing industry in the Commonwealth wants to employ FAS migrants, as these workers count toward the 20-percent “local workforce” requirement in an industry that mainly employs foreign workers. Further, CNMI government officials have reported that it is far more cost effective to hire a FAS citizen, given the immigration filing expenses and other costs associated with hiring other foreign workers. 22 OIA survey data for the “U.S.-born children of migrants” category show that there were few people who had reached adulthood in this category responding to the educational attainment questions. Therefore, we have excluded the “U.S.-born children” category from the discussion of Compact migrant education levels.

Page 15 GAO-02-40 Micronesian Migration Hawaii had the largest portion of Compact migrants with high school degrees, at 55 percent, while about 50 percent of Compact migrants in Guam and 44 percent in the CNMI had high school degrees. Moreover, the percentage of FAS migrants from the FSM in Guam with high school degrees decreased during the 1990s, while rising and falling over this time period in the CNMI. According to OIA survey data, a larger portion of FAS migrants from Palau had high school degrees than other FAS migrants.23

Compact Migration Guam, Hawaii, and the CNMI governments have identified significiant Compact migration impact. The three U.S. island areas have estimated Has Cost U.S. Island costs to local governments of at least $371 million for 1986 through 2000 Areas Hundreds of that are associated with services provided to migrants from the FSM, the RMI, and Palau. All three U.S. island areas have reported that costs have Millions of Dollars, been concentrated in the areas of health and education, though other costs While Population have also been identified.24 Finally, concerns have been raised by all three U.S. areas, though primarily Hawaii, about public health problems Growth of the FSM associated with Compact migrants. Of note, U.S. island area impact and the RMI Has estimates do not include the positive impact of FAS migrants.25 While all three U.S. island area governments have acknowledged that FAS migrants Slowed have had positive impacts, such as contributing to the tax base and filling employment needs, the Compact’s enabling legislation specifically requires reports on adverse impact and does not request information regarding positive impact. Regarding the impact of migration on the FSM and the RMI, the populations of both nations have shown reduced growth in recent years despite continued high birth rates, and government officials in both countries view the Compact’s migration provisions as critical to providing migrants with economic opportunities that are not available in these small countries.

23 Also of interest, in all three U.S. island areas, at least 70 percent of the Compact migrant population was under the age of 30 when the surveys were conducted.

24 Compact impact estimates in the CNMI have been primarily in the health and education areas in recent years; public safety costs had exceeded education costs until 1999. 25 The CNMI’s impact estimate for 1996 was an exception and quantified $3.6 million in positive benefits from FAS migrants.

Page 16 GAO-02-40 Micronesian Migration U.S. Island Areas Reported The governments of Guam, Hawaii, and the CNMI, which have estimated Significant Adverse Compact migrant impact that collectively totals between $371 million and Compact Impact, Primarily $399 million, have determined that the cost of FAS migrants to the local in the Areas of Health and governments has been significant. Guam’s total estimate for the entire Compact period (1986-2000) accounts for about half ($180 million) of the Education total impact estimate range for all three areas (see table 3). The CNMI also has impact estimates for the entire Compact period and has a total impact estimate range of $105 million to $133 million. Hawaii has prepared estimated impact costs only for 1996 through 2000, though these reports identify some costs for earlier years. Thus, for the most part, Hawaii does not have estimates for 10 years that are covered by the other two areas (1986-1995). Hawaii has identified about $86 million in total impact costs. Costs for the three areas have been focused in the areas of health care and education, though public safety and welfare costs have also been identified. While the reported impact costs of Guam and Hawaii have been increasing over time, the CNMI’s impact estimates decreased by almost 40 percent from fiscal year 1998 to fiscal year 2000. This reduction is reportedly due to a decreasing presence of FAS migrants in the CNMI. The 2000 impact estimates prepared by the three areas showed that impact amounts represented about 7 percent, 0.5 percent, and 4 percent of the budget revenues of Guam, Hawaii, and the CNMI, respectively, for that year.26

Table 3: Compact Impact Estimates for Guam, Hawaii, and the CNMI, 1986-2000

Dollars in millionsa Year Guam Hawaiib CNMI Total 1986-95 $69.8 $23.4c $43.7-$71.7 d $136.9-$164.9 1996 16.9 6.4 11.0e 34.3 1997 16.9f 12.2 13.7 42.8 1998 21.9 12.4 15.1 49.4 1999 23.0 14.1 12.3 49.4 2000 31.5 17.5 9.2 58.2 Total $180 $86 $105-$133 $371-$399

aThe data in this table cannot be converted into constant dollars, since some of the impact data reported by the U.S. island governments are not assigned to specific years.

26 The budgetary impact is clearly largest for Guam and the CNMI. However, the Compact’s enabling legislation says that compensation may be provided for increased demands in certain areas; there is no stated threshold regarding impact on total government operations that must be reached in order to obtain compensation.

Page 17 GAO-02-40 Micronesian Migration bWhile Guam and the CNMI have calculated costs on a fiscal year basis, Hawaii’s costs are a combination of fiscal year and calendar year costs. cThis figure represents Hawaii’s education and inmate incarceration costs for FAS migrants for 1988- 95 that were provided in later estimate reports.

dThis 1986-95 impact cost range was provided in a 2000 CNMI congressional testimony. eThis figure was calculated by the Hay Group/Economic Systems, Inc., for the government of the CNMI. fThis figure was calculated by Ernst & Young, LLP for the government of Guam. The government of Guam estimates for 1996, 1998, and 1999, were derived from the 1997 Ernst & Young calculations, though costs associated with the hospital that receives government funding were added beginning in 1998. Source: Yearly impact reports of Guam (1987-95, 1997, and 2000), Hawaii (1996-2000), and the CNMI (1996-2000), supplemented by additional totals provided by Guam and the CNMI for years when separate impact reports were not prepared.

Health Care Costs The health care systems of the FSM and the RMI are viewed by U.S. and U.S. island area governments as inadequate to meet the needs of the population, providing incentive to travel or move to the United States in order to receive appropriate health care.27 Health costs were the greatest area of impact for the CNMI in 2000. In that year, 43 percent ($4 million) of all identified CNMI impact costs were related to health care. Emergency, general, dental, and pediatric care provided by the CNMI Department of Public Health (the government agency responsible for providing health services and administering the Community Health Center) were identified as high-cost migrant services. According to a CNMI Department of Public Health Services official, neonatal intensive care is a key issue for FAS migrants. This official reported that expectant mothers often have no insurance and have no prenatal care at all until they arrive at the Community Health Center, ready to deliver.

Guam’s largest single area of impact in health in its 2000 impact assessment was identified as unpaid services by Guam Memorial Hospital (which receives government funding) to FAS patients, totaling over $5.4 million in 2000.28 Officials from Guam Memorial Hospital expressed frustration with FAS patients and noted that these patients often rely on the hospital’s emergency room for primary health care and that many conditions treated are not urgent. The emergency room treats about 3,000

27 The Compact with the FSM and the RMI acknowledged this situation by including a provision that provides funding to send FSM and RMI citizens abroad for medical care via a medical referral system. 28 Guam also identified $2.1 million in Medicaid costs and $2.4 million for its local Medically Indigent Program.

Page 18 GAO-02-40 Micronesian Migration patients per month; about 350 of those patients (12 percent) are FAS patients (compared with FAS representation of 5 percent of Guam’s population). As in the CNMI, problems with expectant FAS mothers arriving at the hospital close to delivery and with no prior prenatal care were mentioned. The Governor of Guam told us that in his view the U.S. naval hospital on Guam is underutilized and could provide care for FAS migrants.

Hawaii’s government health-related cost of $3.7 million in 2000 went to support FAS migrants who, as of April 2000, no longer receive federal health benefits due to welfare reform legislation. These health benefits for FAS migrants are now funded solely by the state. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, as amended, (P.L. 104-193), referred to as the Welfare Reform Act, cut certain federal public benefits to some legal aliens, including migrants who enter under the Compact. Medicaid, a program to provide funding to low-income individuals for health care and whose costs are shared between the federal and state governments, is one of the federal programs that is no longer available to FAS migrants. This loss of eligibility has been cited as a reason for expected increases in impact costs for Hawaii, as the state has decided to provide state funding in place of lost federal funds.29 An Hawaii Department of Health official noted that it is illogical for the United States to make migration to the United States easily accessible for poor FAS citizens but then make health care difficult to obtain.30

29 While Guam and the CNMI stopped submitting Medicaid claims for FAS patients in 1997, Hawaii disputed the exclusion of Compact migrants from the program and continued to submit Medicaid claims and receive federal funding for these patients. Following meetings and correspondence with the U.S. Department of Health and Human Services’ Health Care Financing Administration (the agency responsible for administering the Medicaid program and recently renamed the Center for Medicare and Medicaid Services), Hawaii agreed to comply with the Welfare Reform Act, effective April 2000. This issue is more important for Hawaii than for Guam and the CNMI, as the state’s access to federal funds under Medicaid is unlimited, while both Guam and the CNMI have caps on federal funds for Medicaid. Because Guam’s and the CNMI’s Medicaid caps were exceeded prior to the Welfare Reform Act, the impact of the act and the subsequent FAS migrant loss of Medicaid eligibility is less relevant for these two U.S. areas as the amount of federal funding has not changed for them.

30 Further, Hawaii, which does not have a state-funded hospital, has reported that several private health care facilities have experienced bad debt and have outstanding accounts receivable from FAS patients. While these private sector costs are not included in our report’s local government impact estimates, they are addressed in Hawaii’s impact estimate reports as costs that are significant.

Page 19 GAO-02-40 Micronesian Migration Education Costs Inadequate school systems in the FSM and the RMI are viewed by FAS and U.S. island governments as another reason for migration. For example, an RMI government official said that RMI schools are very bad, with insufficient supplies and unqualified teachers, and Marshallese citizens migrate in search of better educational opportunities. According to education officials in Guam and the CNMI, there is an incentive for FSM students to come to those two U.S. locations for public education, as teachers in the FSM do not have 4-year university degrees and the education infrastructure is inadequate. In parts of the FSM only a portion of students are selected to attend high school. Some portion of the students who are not selected, as well as those who live in areas with insufficient school facilities, then reportedly move to U.S. areas to attend high school. FSM and RMI migrants told us that they moved to U.S. areas to attend school themselves or to enroll their children in school.

Guam’s and Hawaii’s costs in 2000 were primarily in public education, at $17 million and $10.6 million, respectively (54 percent and 58 percent of total estimated impact). The CNMI’s education costs were $2.8 million (31 percent of total impact costs) in 2000. In their most recent impact reports, FAS students accounted for about 11 percent, 1 percent, and 9 percent of the total student population in Guam, Hawaii, and the CNMI.31 Officials from the Departments of Education in Guam and Hawaii noted that FAS students have a tendency to be rather transient, entering and leaving school a few times each year. Moreover, education officials in Guam and the CNMI said that some FAS students have never been in a school classroom prior to moving to a U.S. area. This makes their integration into the school system difficult.

Calculations prepared by the U.S. island governments may have underestimated certain education costs, as not all students and not all costs were captured. For example, officials from the Hawaii Department of Education told us that, rather than calculating costs for all FAS students, they only estimated costs associated with FAS students who participated in the state’s English as a Second Language program.32

31 Hawaii’s percentage is a low estimate, as this figure only includes FAS students who participated in the state’s English as a Second Language program. 32 While Hawaii understated its estimate of FAS migrant impact on education in certain ways, it used too high a per pupil cost in its calculations. Hawaii overstated cost by not excluding federal contributions to Hawaii from its calculation of per pupil education cost. When federal funds provided to Hawaii are excluded, costs are reduced from $6,773 to $6,112 per pupil, which represents state and local education costs.

Page 20 GAO-02-40 Micronesian Migration Further, education officials in all three U.S. locations told us that, while education costs were calculated based on an average cost per student for the entire student population, FAS students have higher costs than other students due to poor language and other skills. None of the areas quantified the costs associated with additional efforts required to assist FAS students.33

Other Costs The three island areas have also identified other Compact impact costs, though all were small in comparison to those related to health and education and accounted for about 25 percent or less of total impact costs in the most recent impact estimates. For fiscal year 2000, Guam identified $4.6 million in costs related to public assistance programs and the Department of Corrections. For 2000, Hawaii estimated $3.2 million in welfare assistance provided to FAS migrants. Finally, for fiscal year 2000, the CNMI calculated an additional $2.4 million, which is almost entirely attributable to its Department of Public Safety (which includes police, fire, and corrections services).

Public Health Concerns In addition to financial costs, public health concerns have been raised as Were Also Cited as FAS migrant impacts, particularly by Hawaii, due to the number of Compact Migrant Impact migrants with communicable diseases entering U.S. island areas. For example, in its 1997 impact assessment, Hawaii stated that public health was the state’s most pressing concern and noted a recent outbreak of Hansen’s Disease (leprosy) on the island of Hawaii. A CNMI Department of Public Health Services official also told us that the number of cases of tuberculosis and Hansen’s Disease diagnosed for FAS citizens is increasing, and a Guam Department of Public Health and Social Services official reported that concerns exist regarding communicable diseases, low immunization rates, and noncompliance with treatment regimens for FAS migrants. Hawaii Department of Health officials told us that controlling communicable disease problems within FAS communities can be difficult; migrants do not seek regular medical attention and so require extensive outreach from the Department in order to identify and

33 Guam, Hawaii, and the CNMI have reported on operating costs of education, but omitted the capital cost of providing facilities for FAS students. These omitted costs can be substantial. For example, Guam reported an FAS student population of 3,425, which, based on recent student to teacher ratios, could require an additional 134 teachers. Recent school construction in Guam costs about $500,000 per teacher. Similarly, in Hawaii, 60 classrooms may be required for teaching the 1,565 FAS students counted. In the 1999-2000 school year, cost of Hawaii classroom construction averaged about $720,000.

Page 21 GAO-02-40 Micronesian Migration effectively treat communicable diseases. Further, Department officials noted that health screenings of Compact migrants are not required for entry into the United States, preventing the identification and treatment of communicable diseases prior to arrival in a U.S. area. INS officials confirmed that health screenings are not required of Compact migrants, nor are they enforced for any nonimmigrant group. INS officials told us that the agency “is the first line of defense” for identifying travelers to the United States who may have communicable health problems. They acknowledged, however, that INS officers are not trained or legitimately qualified in this area, and it is difficult for them to identify travelers with health problems.34

Migration From the FSM The populations of both nations have been affected by the out-migration and the RMI Led to provided for under the Compact. From 1989 to 1994, the FSM population Reduced Population grew 1.9 percent annually, from 95,740 to 105,506. During the next 5-year Growth Rates in Both period, the FSM population grew by only about 1,500 people (.2 percent annually) to reach about 107,000. This very small increase demonstrates Countries that the FSM population has almost stopped growing in recent years, reportedly due to out-migration. Birth rates remain high in both countries. FSM government officials expressed the view that migration rates are increasing and cited a reduction in government jobs following cuts in U.S. funding as a key reason why FSM citizens have migrated in recent years, in addition to employment and education opportunities and access to health care.

Because of out-migration, population growth in the RMI since 1988, when the population was 43,380, has slowed considerably to 1.5 percent annually. This is the lowest rate of growth since 1958. The 1999 RMI census reported 50,840 persons in the RMI, which was about 10,000 fewer people than the RMI government had projected. Emigration is reported as the primary reason for the lower population growth. RMI government officials told us that the rate of migration out of the RMI has increased over the past 5 years and cited the recent public sector reform program, which eliminated government jobs, as a key reason for this increase.

34 According to INS officials, if an INS officer who is processing foreign entrants at a port of entry into the United States decides that a particular entrant might have a health problem, the traveler will be referred to a public health official. In accordance with the 1952 Immigration and Nationality Act, as amended, this official will then examine the traveler and will make a recommendation to the INS as to whether the traveler should be allowed to stay in the country or should be removed, according to INS officials.

Page 22 GAO-02-40 Micronesian Migration Government officials from the FSM and the RMI view the Compact’s migration rights as key to easing problems associated with limited economic opportunities and population growth on these small island nations. While the RMI government does not have an official policy regarding migration, it has published a document encouraging overseas employment,35 and a recent draft planning document suggested that the government “encourage the emigration of whole families, equivalent to the annual population increase (1,500-2,000 persons) to permanent residence overseas.” The FSM government does not have an official policy on emigration.36

Use of Options The Compact and its enabling legislation include two options to address the impact of migrants. The law, which states that the Congress will act Available to Address “sympathetically and expeditiously” to redress adverse consequences of Impact Has Not Compact implementation, provided authorization for appropriation of funds to cover the costs incurred, if any, by Hawaii, Guam, and the CNMI Satisfied U.S. Island resulting from any increased demands placed on educational and social Governments services by migrants from the FSM and the RMI.37 Guam has received about $41 million in compensation and the CNMI has received almost $3.8 million. Hawaii has received no compensation. Further, the Compact states that nondiscriminatory limitations may be placed on the rights of Compact migrants to establish “habitual residence” (continuing residence) in a territory or possession of the United States.38 Such limitations went into effect in September 2000 and are viewed by INS officials we

35 The RMI’s first 5-year development plan, 1985-1989, said that “selective emigration of youth for higher studies and employment overseas will be promoted to ease the labor supply situation. 36 No recent studies have been conducted by the FSM or the RMI regarding issues related to emigration, such as financial remittances from abroad and the so-called “brain drain” (the loss of educated professionals). However, officials from the FSM government have estimated that financial remittances of $3 million to $5 million are now being sent back to the FSM from abroad, while RMI government officials believe there is a net outflow of funds from the RMI to migrants abroad. While officials from the FSM and the RMI believe that there is some brain drain as educated citizens leave, experts on Micronesian migration believe that any brain drain that may be occurring in these two countries does not currently include the most talented citizens. 37 Compensation is also authorized for American Samoa, though this U.S. Pacific Island territory has never reported any Compact impact. In addition, the Compact with Palau authorizes such compensation for impact resulting from Palauan migrants.

38 According to the Compact, “habitual residence” is defined as place of general abode or a principal, actual dwelling place of a continuing or lasting nature.

Page 23 GAO-02-40 Micronesian Migration interviewed as difficult to enforce and, therefore, unlikely to have much impact. The extent to which these two options have been used has not met with the satisfaction of any of the three U.S. island area governments, who believe, among other things, that additional funding for impact costs is necessary. Compact enabling legislation required the President (who designated the Department of the Interior as the responsible agency) to prepare annual Compact impact reports and submit them to the Congress. While these reports do not require any action, they can serve as a tool to assist the U.S. government in determining whether and how to address Compact impact. However, only seven of these reports have been prepared during the 15-year Compact period. Further, Interior has taken limited action to ensure that U.S. island areas estimate impact costs consistently, resulting in reports that contain varying information for each U.S. island area and do not easily allow comparisons to determine relative impact across locations.

Two Options Are Available Two specific options are available in the Compact and its enabling to Address Impact; Their legislation to address Compact impact: financial compensation and Usage Has Been Viewed as limitations on the rights of FAS migrants to establish continuing residence Inadequate by Guam, in a U.S. territory or possession. U.S. government use of these options has not satisfied the Guam, Hawaii, or CNMI governments. Hawaii, and the CNMI

Financial Compensation Financial compensation provided to Guam, Hawaii, and the CNMI to address migration impact has been far less than the impact estimated by the three area governments and submitted to Interior. Since the Compact with the FSM and the RMI was enacted through 2001, the U.S. government has provided approximately $41 million in impact compensation to Guam, compared with the $180 million in increased costs the territory has estimated it has incurred from 1986 through 2000 (i.e., about 23 percent of total estimated impact costs). The Commonwealth of the Northern Mariana Islands has received $3.8 million in compensation from 1986-2001 compared with $105 million to $133 million in estimated costs from 1986- 2000 (less than 4 percent of total costs).39 While Hawaii has estimated $86 million in Compact impact costs, the state has received no compensation.

39 While compensation figures cover the period of 1986-2001, impact estimates have been prepared by the three U.S. island governments to cover the years 1986-2000 (i.e., one less year than covered by compensation funding).

Page 24 GAO-02-40 Micronesian Migration The Compact’s enabling legislation does not require compensation. Rather, it authorizes appropriations to cover certain impact costs and notes that the Congress will act “sympathetically and expeditiously” to redress adverse consequences. An OIA official noted that the reality of budget constraints has prevented compensation to the extent that impact has been incurred. However, government officials from Guam, Hawaii, and the CNMI have expressed frustration that these island areas are bearing the costs of a federal decision to allow unrestricted migration through the Compact and believe that compensation levels have been inadequate.

Compensation funding received by Guam has not, for the most part, been used in the areas of health and education—the areas that have experienced the greatest migrant impact. As a result of U.S. legislative requirements, the government of Guam was directed to use a majority of its impact compensation funding for capital improvement projects. For fiscal years 1996 through 2001 (when more than $35 million was specifically provided to Guam through legislative action rather than through OIA’s technical assistance account), we determined that Guam has spent or plans to spend almost $10 million for road paving, almost $8 million for water projects, more than $4 million for equipment for Guam Memorial Hospital, and more than $4 million for gyms. Prior to 1996, Guam received about $850,000 received from OIA’s technical assistance account for a Compact Impact Information and Education Program, established by the government of Guam to “develop and implement information, educational, and organizational activities to assist FSM and RMI citizens in receiving the support and assistance [needed to maintain] cultural integrity, integration, equity, and productivity.” This program is no longer operating. In addition to funding for Guam Memorial Hospital listed above, Guam has also used earlier impact funding in ways that directly addressed Compact migrant impact costs. For example, Guam used $600,000 received from OIA’s technical assistance account in 1994 to partially reimburse expenditures made by the Department of Public Health for assistance provided to FSM and RMI citizens. According to a CNMI government official, the CNMI has used, or is planning to use, most of its compensation funding for agencies affected by Compact migration impact: the Department of Public Health, the Department of Public Safety, and the Public School System. The governments of Guam and the CNMI believe that restricting the use of compensation funding to capital improvement projects does not target the money where it could be best used.

Nondiscriminatory Limitations A second option available to address Compact impact—limiting the length on Habitual Residence of stay in some U.S. areas of certain Compact migrants—was implemented 14 years after the Compact went into effect, and its enforcement and

Page 25 GAO-02-40 Micronesian Migration impact may be limited, according to the INS. The Compact states that nondiscriminatory limitations can be placed on the rights of Compact migrants to establish “habitual residence” in U.S. territories or possessions. However, because the CNMI already controls its own immigration and Hawaii is not a territory or possession, Guam is the only potential beneficiary of such limitations for all practical purposes.40 Habitual residence limitations for Guam, as well as certain other limitations on all aliens living in the United States, are the only means of regulating the ability of Compact migrants to stay in U.S. areas indefinitely. In its annual impact reports, OIA’s one consistent recommendation for reducing impact has been to implement habitual residence restrictions.

Immigration legislation passed in 1996 states that not later than 6 months after the date of enactment of the act, the Commissioner of Immigration and Naturalization shall issue regulations governing rights of “habitual residence” in the United States under the terms of the Compacts.41 These regulations were not implemented until 4 years later, in September 2000, and define habitual residents, in part, as those FAS migrants who have been in a U.S. territory (i.e., Guam) for a total of 365 cumulative (i.e., not consecutive) days. The regulations provide that, in part, habitual residents are subject to removal if they are not, and have not been, self-supporting for a period exceeding 60 consecutive days for reasons other than a lawful strike or other labor dispute involving work stoppage, or have received unauthorized public benefits by fraud or willful misrepresentation. “Self- supporting” is defined, in part, as having a lawful occupation of a current and continuing nature that provides 40 hours of gainful employment each week, or (if unable to meet the 40-hour employment requirement) having lawfully derived funds that meet or exceed 100 percent of the official poverty guidelines for Hawaii.

Officials from INS believe that these regulations will be difficult to enforce and so will have little impact in Guam. They have stated that this is primarily due to the fact that Compact migrants, like all other nonimmigrants, are not tracked once they arrive in a U.S. area because the INS cannot devote the resources necessary to do so. There is no way of

40 While such regulations would also apply to the Commonwealth of Puerto Rico and the American Virgin Islands, neither of these locations has indicated that Compact migrants are present and creating an adverse impact. These regulations would not apply to American Samoa as that U.S. territory controls its own immigration. 41 The Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (P.L. 104-208).

Page 26 GAO-02-40 Micronesian Migration knowing where a Compact migrant is living unless, for example, the migrant is arrested for a crime and reported to the INS. An INS official in Guam reported that the INS has taken no specific action there to enforce the habitual residence regulations. A Guam government official said that while the issuance of the regulations puts the INS more “on track,” there is still the problem of tracking migrants, and the INS will not be able to deal with tracking habitual residents in Guam. This official also expressed the view that the regulatory language that the INS will share migrant entry data with Guam, which can assist in collaborative tracking and enforcement efforts, on an “as-needed basis” is too limited. Finally, this official noted that even if a habitual resident is deported from Guam, this person can reenter under a different name (and will thus avoid detection by the INS as a migrant that should be denied entry).

The CNMI controls its own immigration and so has had the option to unilaterally impose nondiscriminatory limitations on habitual residence since the Compacts with the FAS countries were implemented. The Governor of the CNMI told us that it would be very hard for the CNMI to take such action, for social and cultural reasons. Nonetheless, the CNMI is now studying the issue and considering whether to establish limitations on habitual residents. A Department of the Interior official told us that OIA told the CNMI to wait to issue habitual residence limitations until the INS had issued its regulations. This way, the CNMI could draft its limitations in conformity with those of the INS, resulting in a single policy regarding habitual residence.

Tool Available for One tool available to the U.S. government in determining whether and how Assessing Whether and to address the effect of the Compacts is the impact reports required in Compact enabling legislation. These reports are to discuss, among other How to Address Impact 42 Has Been Incomplete things, the adverse consequences of migration under the Compacts. However, OIA, despite the legal requirement for Interior to report annually to the Congress on impact and provide recommendations to address this

42 In addition to migration issues, Compact impact reports are to address trade, taxation, labor laws, minimum wages, social systems and infrastructure, and environmental regulation.

Page 27 GAO-02-40 Micronesian Migration impact, has only prepared reports in 1989 and 1996-2001.43 OIA officials told us that no reports were prepared between 1989 and 1996 because the Congress was not interested in this issue. OIA also noted that while impact reports were not submitted to the Congress, mention was made of Compact impact as part of OIA’s annual appropriations hearing. OIA has based its assessments of impact on the estimates prepared by the governments of Guam, Hawaii, and the CNMI. It has also based its reports on the previously discussed FAS migrant population surveys it has funded using technical assistance from the U.S. Bureau of the Census. These reports have found that Compact impact has been substantial and have included general recommendations for addressing impact such as proposing the establishment of nondiscriminatory limitations on the long- term residency of Compact migrants. In November 2000, amendments to the Organic Act of Guam (P.L. 106-504) changed the party responsible for reporting on impact from Interior to the governors of Hawaii and U.S. territories or commonwealths.44

OIA has also not ensured that the three U.S. islands areas use, to the extent possible, uniform approaches to calculate impact. Interior issued guidelines in 1994 on how to calculate impact costs and which costs to include. These guidelines were issued in response to a 1993 report by the Department of the Interior’s Office of the Inspector General that recommended that OIA develop and disseminate guidelines and procedures for use in determining Guam’s Compact impact costs.45 These guidelines, which were drafted in the context of reviewing a Guam impact assessment for 1993, addressed key areas such as health and education. The guidelines also stated that a “baseline” population of migrants who

43 Interior was involved in a lawsuit brought by Guam in 1995 and joined by Hawaii and the CNMI challenging the agency’s failure to issue annual impact report as required in the Compact’s enabling legislation. The suit also later challenged the sufficiency of the cumulative report that Interior finally submitted in September 1996 while the lawsuit was ongoing. Ultimately, the U.S. Court of Appeals for the Ninth Circuit held that the adequacy of the 1996 report and any subsequent reports was not reviewable. The Court also held that the injury asserted by the governments was not redressable, because the annual report required by the Congress in the Compact is primarily a tool for the Congress’s own use and neither provides any legal consequences to the governments nor requires the Congress to act. 44 These governors may provide impact reports to Interior, which will then review and forward these reports to the Congress with the comments of the administration.

45 Audit Report: Impact of the Compact of Free Association on the Government of Guam (U.S. Department of the Interior, Office of the Inspector General, June 1993 [93-I-1195]). At the time of this report, OIA was known as the Office of Territorial and International Affairs.

Page 28 GAO-02-40 Micronesian Migration were on Guam prior to the Compact (and whose impact thus, in Interior’s view, cannot be easily attributed to the Compact) should be subtracted from Guam’s impact estimate. Guam subsequently took action to implement OIA’s guidelines. However, while an OIA official reported that he submitted these guidelines to the CNMI, officials from the CNMI could not confirm ever receiving such guidelines and stated that their impact assessments have not been based on OIA guidelines. An Hawaii State official said that while the state did not receive written guidelines from OIA, verbal discussions were held regarding issues such as using per student costs for education estimates.

Further, OIA has not provided consistent review of impact estimates submitted by the three U.S. island area governments. For example, while OIA has instructed Guam and the CNMI in its annual reports and elsewhere to remove pre-Compact migrants from impact estimates (i.e., subtract a “baseline”), no such guidance has ever been provided to Hawaii in OIA’s annual reports, despite the fact that Hawaii has estimated costs for all FAS migrants living in the state and had a pre-Compact migrant population that was roughly comparable to that of Guam. In addition, OIA’s 1999 impact report mentioned Hawaii’s lost revenues resulting from the fact that FAS college and university students pay resident tuition, after having noted in its 1994 guidelines that higher education costs could not be justified for Guam. OIA has also not addressed the fact that many of Guam’s impact estimates do not include Palauans (while estimates for the other two areas do include this group of migrants) and that Hawaii no longer includes public safety costs in its assessments. As a result, all three areas have included different areas of impact and have defined the impact population differently and impact estimates, though providing valuable data, do not easily allow comparisons across U.S. island areas to determine actual relative impact.46 OIA itself noted in its impact report for 2000 that determining the costs of providing services to migrants has become increasingly difficult, in part, because “[T]here is no consistent methodology among U.S. areas for measuring the cost of providing services to migrants” and “[T]he type of impact and the concerns vary among the reporting areas.”

46 OIA did attempt to calculate comparable impact estimates for the three U.S. island areas for 1 year (1997 for Guam and the CNMI and 1999 for Hawaii) that included only public education, health, and welfare costs and factored out a pre-Compact migrant baseline. OIA’s estimates identified $12.8 million for Guam and $6.6 million for the CNMI in 1997, and $11.6 million for Hawaii in 1999.

Page 29 GAO-02-40 Micronesian Migration Changes in Compact Changes in the level of future U.S. economic assistance may alter the rate of migration. For example, significant reductions in aid to the FSM and the Assistance and RMI that reduce government employment would be expected to spur Provisions Might migration. On the other hand, targeting future U.S. assistance to the FSM and the RMI for education and health purposes could reduce some of the Affect Migration motivation to migrate (although migration will continue as long as Levels and Impact employment opportunities in both countries remain limited). Further, improvements in migrant health and education status would be expected to reduce migrant impact in U.S. destinations. Thus, changes in future U.S. assistance could have repercussions for the FSM and the RMI, as well as any U.S. location receiving migrants. Additionally, changes in Compact provisions, such as requiring health screening, could reduce the impact of migrants on U.S. areas, though government officials from the two Pacific Island nations do not view migration provisions as subject to renegotiation.

To date, no formal demographic or economic analysis of changes in economic assistance has been completed.47 However, officials in the United States, the FSM, and the RMI draw on their past experience with Compact migration to project how proposed changes in Compact assistance could affect migration levels. Additionally, they also have views on how changes in health and education may affect the impact of migrants on U.S. destinations. Officials in U.S. island areas seeking to reduce adverse impact advocate certain changes in Compact assistance and in migration provisions.

Reduced U.S. Assistance Past reductions in U.S. assistance appeared to promote migration, and Could Spur Migration future reductions could be expected to have a similar impact. Reductions in U.S. assistance to the FSM and the RMI occurred twice during the Compact. The second reduction occurred in October 1996 and lowered U.S. Compact funds for government operations by 17 percent in the FSM and 9 percent in the RMI. Both countries reduced their public sectors: FSM government employment fell by 24 percent between 1995 and 1997, while the RMI reduced government employment by 36 percent between

47 The Economic Management Policy Advisory Team of the FSM has developed an economywide model of the FSM economy that will show how different U.S. assistance levels will affect migration. The study was expected to be completed in August 2001.

Page 30 GAO-02-40 Micronesian Migration 1995 and 2000.48 Reduced Compact funding increased migration, according to FSM and RMI government officials and migrants we met with. Regarding the current negotiations, FSM and RMI officials project increased migration if the United States reduces its assistance to their nations.49 For example, the FSM analysis of proposed lower U.S. assistance levels concludes: “The economy would be caught in a vicious circle of low growth, compounded by a series of shocks requiring downward adjustment, loss of real incomes, unemployment, and outward migration.” An OIA official noted that a reduction in Compact funding may lead to greater migration, but only very marginally. Officials from the FSM and the RMI believe that migration will tend to favor the U.S. mainland, bypassing Guam, Hawaii, and the CNMI.

Targeting U.S. Assistance Efforts to target assistance to the health and education sectors in the FSM to Health and Education and the RMI might reduce migration levels and the impact of migration on Might Reduce Migration the U.S. areas. The U.S. Compact negotiator testified before the Congress and Its Impacts in June 2000 that the United States intends to provide future funds in targeted grants that would include the areas of health and education. An emphasis on health spending in both countries, where health services are inadequate, might reduce the number of citizens who go to the three U.S. island areas, where health officials report that some migrants come specifically for medical treatment. For example, after the FSM state of Pohnpei stopped providing hemodialysis (blood purification), FSM citizens showed up more frequently for treatment in the CNMI. Further, improvements in FSM and RMI health care systems that better the health of migrants and improve access to quality health care might also reduce migration impact on U.S. areas. The State Department Compact negotiator has said that such targeted spending would reduce incentives to migrate and would ensure that those who do migrate are in a better position to contribute to their new communities.50 According to Hawaii health officials, Compact spending should go to ensure that the FSM and the RMI

48 While the cut in U.S. funding for the RMI and the subsequent cut in government jobs may appear disproportionate, we reported in our September 2000 report regarding FSM and RMI spending of U.S. Compact funds that by the late 1990s the RMI had very little discretionary Compact funding due, primarily, to debt service obligations. 49 This is not unique to the FAS. When New Zealand cut its support to the Cook Islands by 60 percent during the 1990s, about one-fourth of the Cook Island population migrated. 50 An OIA official told us that targeted health and education spending could ease the impact of migrants, although it probably would not reduce migration much.

Page 31 GAO-02-40 Micronesian Migration can offer competent basic primary health care, specifically for immunizations and prenatal care, and to address tuberculosis, Hansen’s Disease, hepatitis, and diabetes in an effort to reduce the incidence of these health problems in Hawaii. Regarding future U.S. Compact health care assistance, Guam health officials said health care funds should be spent on prenatal care, communicable, and vaccine-preventable diseases with the stipulation that it be provided with strict guidelines for its use. FSM officials report that migration might slow if FSM health care equaled that of the U.S. mainland. RMI officials believe that any increases in health spending would discourage migration as they noted that the better health care available in the United States is a motivation for migration.

Increased Compact spending on education might reduce migrant impact costs. Hawaii education officials noted that FAS teachers often have limited credentials and that it takes migrant children 5-7 years to attain average literacy. Similarly, University of Hawaii faculty reported that FAS students required remedial course work. The implication of this is that better FAS education would enable FAS students to perform better in U.S. schools. Similarly, Guam believes that increased spending on education in the FAS would likely reduce migration demands on Guam’s education system. FSM officials believe that increased spending on education could reduce the migration of whole families and could improve economic opportunities in the FSM. However, they also reported that increased education funding would increase the number of people migrating to attend U.S. colleges. Similarly, RMI officials believe that increased education spending would discourage migration. One RMI official doubted that the RMI education system could be quickly fixed, which leaves migration as the best option.

Changes in Compact The U.S. Compact negotiator testified before the Congress in June 2000 Migration Provisions Are that the United States intends to seek changes in Compact migration Under Consideration provisions to reduce the adverse impact on the United States. Two possible changes have been mentioned by the U.S. negotiator: establishing a system of health screening, to ensure that contagious individuals receive treatment in order to protect public health; and requiring a passport, in order to better screen out criminals, determine admissibility for entry to

Page 32 GAO-02-40 Micronesian Migration the United States, and facilitate entry for FAS travelers.51 Health officials in Hawaii believe that migrants should be screened prior to leaving the FSM and the RMI and only allowed to enter the United States if they are noninfectious.52 In Hawaii, public health nurses reiterated that many of the problems that have occurred in Hawaii are associated with treatable, but communicable, diseases. The FSM government does not believe that health screening is its responsibility or that it is practical. However, FSM officials believe that criminal migrants hurt the standing of all migrants, and the FSM is considering requiring a passport before leaving the FSM. RMI officials believe that health screening would be helpful to both the RMI and the United States; therefore, they support “minimal” screening for health problems. Regarding a passport requirement, INS officials support this option, although they have pointed out that a key issue would be to ensure that passports are secure.53

The possibility that the United States might seek restrictions on migration is of concern to both countries. The FSM has responded to the United States that FSM negotiators do not have the authority to discuss migration. Further, the FSM said that any changes made should be to “facilitate migration.” RMI government officials told us that the migration benefits are not up for renegotiation and that they are very important for the country, providing a “critical safety valve.”

Conclusions FAS migration has clearly had a significant impact on Guam, Hawaii, and the CNMI and has required government services in key areas. Compact migrants have required local expenditures in areas such as health and

51 Screening for criminals is successfully occurring without a passport entry requirement. Since July 2000, the U.S. Embassy in the RMI has provided INS with the names of convicted RMI felons. According to INS, these data are used to identify inadmissible criminal aliens at the port of entry and have barred several individuals from entering Hawaii. 52 Hawaii sought health screening prior to the approval of the Compact by the Congress. In 1985 testimony during a Congressional oversight hearing, the Director of Hawaii’s Department of Health advocated programs in the FSM and the RMI to screen and implement control measures for diseases such as tuberculosis and Hansen’s Disease and that programs be established in Hawaii to screen and treat those who migrate to Hawaii.

53 INS has recently (July 18, 2001), issued a proposed rule to clarify the entry requirements for citizens of Compact countries who have been adopted by citizens or lawful permanent residents of the United States. In addition, the proposed rule requires citizens of Compact countries who seek to enter the United States as nonimmigrants under the Compact to present a passport or similar travel document issued by the Compact country of which they are a citizen in order to establish their entitlement to Compact privileges.

Page 33 GAO-02-40 Micronesian Migration education and, further, have particularly affected the budgetary resources of Guam and the CNMI—U.S. island locations that have relatively small populations and budgets, and economies that have recently suffered economic setbacks. The budgetary impact on Hawaii is relatively smaller but can be expected to grow as Hawaii begins to absorb health care costs that were once covered by the U.S. government. Public health problems are also an important concern for all three U.S. island areas. Because the Compact allows FAS migrants who have limited financial means and ability to pay for health care to enter the United States with few restrictions, U.S. island areas are absorbing much of the health care costs of this poor population. Further, Guam, Hawaii, and the CNMI can be expected to continue to experience Compact impact as long as current poor economic conditions persist in the FSM and the RMI. Targeting future U.S. assistance to the FSM and the RMI for education and health purposes could reduce some of the motivation to migrate and improvements in migrant health and education status might be expected to reduce migrant impact in U.S. destinations.

Recommendation for We recommend that the Secretary of State direct the U.S. Compact Negotiator to consider how to target future health and education funds Executive Action provided to the FSM and the RMI in ways that also effectively address adverse migration impact problems identified by Guam, Hawaii, and the CNMI. For example, the U.S. Negotiator could consider whether a specified portion of the health sector assistance should be targeted at treating and preventing the communicable diseases in the FSM and the RMI that are a public health concern in Guam, Hawaii, and the CNMI. Agency Comments We received comments from the Department of the Interior, the Department of State, and the Immigration and Naturalization Service, as well as to the governments of the FSM, the RMI, Guam, Hawaii, and the CNMI. These agencies and governments generally agreed with our findings, but each had concerns regarding the scope and content of various issues addressed in the report. Of those who addressed our recommendation, State agreed with us, Guam and the CNMI stated that the recommendation should address the lack of employment in the Pacific Island nations, Hawaii proposed that health and education funding be provided only under strict grant conditions, and the FSM felt that the recommendation was unnecessary. Their comments and our responses can be found in appendixes III through IX.

We are sending copies of this report to the Secretary of the Interior, the Secretary of State, the Commissioner of the Immigration and

Page 34 GAO-02-40 Micronesian Migration Naturalization Service, the President of the Federated States of Micronesia, the President of the Republic of the Marshall Islands, the President of the Republic of Palau, the Governor of Guam, the Governor of the state of Hawaii, the Governor of the Commonwealth of the Northern Mariana Islands and to interested congressional committees. We will also make copies available to other interested parties upon request.

If you or your staff have any questions regarding this report, please call me at (202) 512-4128. Other GAO contacts and staff acknowledgments are listed in appendix X.

Loren Yager Director, International Affairs and Trade

Page 35 GAO-02-40 Micronesian Migration Appendix I: Objectives, Scope, Appendix I: Objectives,and Methodology Scope, and Methodology

Based on a request from the Chairman of the House Committee on Resources; the Ranking Minority Member of the House Committee on International Relations; the Chairman of the House Committee on International Relations, Subcommittee on East Asia and the Pacific; and Congressman Doug Bereuter, we (1) identified migration under the Compact (migrant destinations, population size, and characteristics); (2) assessed the impact of this migration on U.S. island areas and the sending nations; (3) determined the use of available options to address impact on U.S. island areas; and (4) explored ways in which future changes in Compact provisions and assistance levels might affect migration levels and impact.

Migration Under the For our first objective, we reviewed data contained in surveys funded by the Department of the Interior’s Office of Insular Affairs (OIA) using Compact assistance from a U.S. Bureau of the Census official. These surveys captured the number and characteristics of migrants from the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI), and the Republic of Palau in Guam (surveys for 1992 and 1997), Hawaii (survey for 1997), and the Commonwealth of the Northern Mariana Islands (CNMI) (surveys for 1993 and 1998). (Our review includes data for the Republic of Palau for our first two objectives because Palauan information regarding impact cannot be disaggregated from the other two Pacific Island nations. Further, the Compact of Free Association with Palau also allows for compensation for costs incurred by U.S. areas as a result of Palauan migrants.) We reviewed these surveys to identify the number of migrants that were living in these three U.S. island areas at the time the surveys were conducted, including migrants who moved before and after implementation of the Compacts of Free Association with the FSM and the RMI in 1986 and the Compact of Free Association with Palau in 1994. We also reviewed these data to identify key characteristics of these migrants such as their reasons for migrating, age and education levels, employment situation, and poverty status. We focused our assessment on the most recent survey data. We also reviewed additional documents, such as the 1995 CNMI census and a Guam assessment of Micronesians on the island in 1997, that contain data on migrants.

The OIA surveys are the most recent and comprehensive data available that identify and describe FSM, RMI, and Palauan migrants in Guam, Hawaii, and the CNMI. We did not attempt to verify the accuracy of any of these data. The survey data appear to be an undercount of migrant population totals (see app. II). We discussed the strengths and weaknesses of the methodology used to collect the survey data with the U.S. Bureau of

Page 36 GAO-02-40 Micronesian Migration Appendix I: Objectives, Scope, and Methodology

the Census official who was involved with the surveys, as well as with U.S. and Guam government and academic officials familiar with the methodology; all agreed that the survey methodology is subject to undercounting. Further, we found several specific instances during our review that indicated that the data may indeed be an undercount. In addition, the survey data we are using are primarily from 1997 and 1998, and the level of migration to these three U.S. island areas since that time is unknown. More current data from the U.S. 2000 census conducted by the U.S. Bureau of the Census that will identify the number and some characteristics of FSM, RMI, and Palauan migrants living in the three U.S. island locations were unavailable; these data, along with data on Pacific islander migrants on the U.S. mainland, are due to be released in late 2001.

The Impact of We began our work on this objective by reviewing the language contained in the Compacts’ enabling legislation addressing migrant impact. To then Migration on U.S. determine the amount of total Compact impact estimated by the Island Areas, the FSM, governments of Guam, Hawaii, and the CNMI, we collected the reviewed impact estimates prepared by each of these three locations. In most cases, and the RMI estimates were either prepared specifically for a certain year and provided detailed information for particular areas, such as the health and education sectors, or were prorated for a certain year based on other years’ estimates when detailed calculations for that year were not prepared. In a few cases, estimates were prepared that covered multiple years and were not tied to a specific year. Because of this, we were unable to convert the impact estimate totals into constant dollars. We identified impact estimate figures and all available supporting data for 1986-2000 for Guam, Hawaii, and the CNMI. We reviewed the estimates and the methodologies used to derive them with government officials who work in the areas of health, education, and public safety in all three locations, as well as U.S. government officials from OIA and the Department of State. We discussed impact with additional parties, including the governors of Guam and the CNMI and their staff, and staff from the governor’s office in Hawaii; FSM and RMI migrant community representatives; and private sector officials. We reviewed fiscal year 2000 budget figures for Guam, Hawaii, and the CNMI to identify the proportion of those figures represented by estimated impact amounts for that year. We also reviewed OIA’s annual impact reports for 1989 and 1996-2001 and the assessments of the three locations’ impact estimates contained therein. To review the impact of migration to U.S. areas on the FSM and the RMI, we held discussions with senior FSM and RMI government officials and reviewed FSM and RMI census documents.

Page 37 GAO-02-40 Micronesian Migration Appendix I: Objectives, Scope, and Methodology

Options Available to To review what actions have been taken that address impact, we reviewed the Compacts’ enabling legislation language regarding the authorization of Address Impact appropriations to cover impact costs, as well as the Compacts’ language on the ability to place nondiscriminatory limitations on the length of stay in U.S. territories of certain migrants from the Freely Associated States (the FSM, the RMI, and Palau). We then identified all OIA technical assistance funding and specific legislative appropriations provided to Guam, Hawaii, and the CNMI to cover estimated impact costs. We discussed the amounts and how this funding has been spent with OIA, Guam, and CNMI government officials. We visited select capital improvement projects (gyms, roads, water projects, etc.) in Guam that have been supported with impact compensation funds. To review the implementation of nondiscriminatory limitations, we reviewed the September 2000 regulations on this issue put forth by the U.S. Immigration and Naturalization Service (INS). We then discussed the terms, enforceability, and potential impact of these regulations with INS officials in Washington, D.C., and Guam, as well as with Guam government officials. We also discussed the possibility of such limitations with officials from the CNMI government.

To assess what actions have been taken by OIA to identify impact and communicate this impact to the Congress, we first reviewed the Compacts’ impact reporting requirement contained in the Compacts’ enabling legislation. We then collected and reviewed all available OIA impact reports, which included reports for 1989 and 1996-2001, as well as OIA’s 1994 guidelines for preparing impact estimates. We discussed the process for preparing, as well as the substance of, the reports and guidelines with the responsible OIA official. Such discussions covered issues such as the reasons for not issuing annual reports for each year following Compact implementation and the need to subtract a “baseline” population from impact estimates. We also discussed OIA’s reports with government officials from Guam, Hawaii, and the CNMI.

Compact Changes To review how changes in the Compact’s economic assistance might affect migration, we reviewed development planning documents prepared by the That Might Affect FSM and the RMI in 2000 regarding population and migration policies. Migration Further, we solicited views regarding possible changes in the Compact from senior officials from the FSM, the RMI, Guam, Hawaii, the CNMI, OIA, INS, and State as well educators, health professionals, business representatives, and the migrant communities.

Page 38 GAO-02-40 Micronesian Migration Appendix I: Objectives, Scope, and Methodology

We conducted our work from October 2000 through June 2001 in accordance with generally accepted government auditing standards.

Page 39 GAO-02-40 Micronesian Migration Appendix II: FAS Migrant Appendix II: FAS MigrantPopulation Data CollectionPopulation Data Collection

The methodology used in the Department of the Interior’s Office of Insular Affairs (OIA) surveys to count the number and characteristics of Micronesians living in U.S. island areas, the “snowball” approach, results in an undercount of the actual migrant population from the Freely Associated States (FAS). While the OIA surveys captured many of the FAS migrants in Guam, Hawaii and the Commonwealth of the Northern Mariana Islands (CNMI), our analysis and review of the data found several illustrations of how the surveys likely undercounted the actual number of FAS migrants in U.S. island destinations. The Snowball Method In order to count and characterize Micronesian migrants in Guam, Hawaii and the CNMI between the 1990 and 2000 U.S. population censuses, OIA utilized the services of U.S. Census Bureau staff to survey U.S island area Micronesian migrant populations in 1992, 1993, 1997, and 1998. The Census official leading the survey used a survey tool referred to as the “snowball” method of surveying special populations. The OIA survey administrator selected and trained FAS migrants, who had received at least high school diplomas and had passed special tests, to serve as “enumerators” to collect data on other migrants in each U.S. area. In Guam, Hawaii, and the CNMI, enumerators from each of the FAS countries identified and interviewed all migrants they knew of from their own countries, then asked these interviewees to identify all migrants from their home country they knew of living in the area, continuing on in this manner until no “new” migrants were identified. For example, Marshallese enumerators only interviewed Marshallese migrants. While the goal of the OIA surveys was to identify 100 percent of the migrants from each FAS nation living in the three U.S. areas, the Census Bureau official involved with the surveys acknowledged that a snowball count inevitably yields less than 100 percent of the actual population. Of note, the snowball data represent a “snapshot” of the FAS migrant communities living in Guam and Hawaii and the CNMI at the time of the surveys. The data do not represent all FAS migrants who ever lived in a U.S. island area, as some of these migrants may have moved elsewhere by the time of the survey and may have different characteristics from migrants who remained in U.S. areas.

Experts whom we interviewed agree that this snowball methodology is the most appropriate strategy to enumerate FAS migrants living in U.S. areas in the Pacific. The snowball methodology generally yields higher quality information than a traditional census, and is reportedly less expensive. The advantages of the snowball methodology include: (1) distinguishing FAS subgroups from the larger population (as well as from one another); (2) providing the ability to shape the survey instrument to obtain desired

Page 40 GAO-02-40 Micronesian Migration Appendix II: FAS Migrant Population Data Collection

information; and (3) minimizing the extent to which ethnic/racial bias and language barriers undermined the quality of the survey since the migrant enumerators were of the same ethnicity as the migrants they interviewed. However, the snowball method misses some individuals who are not connected or networked into the mainstream migrant communities. Thus, it may miss some of those that are living in remote locations/islands, or are in areas with political, economic, or racial tensions. Fears on Guam and Hawaii about being deported may have led some migrants either to not participate at all or to not fully disclose their personal information, according to interviews with FAS migrants in Guam and Hawaii. The snowball approach may also miss transient migrants as well as some who have assimilated into the U.S. areas. Examples of Possible Based on our review of island government administrative data and interviews with migrants, we have found the following examples that Undercount of the suggest the OIA’s survey data appear to undercount of the actual Actual Number of FAS population of FAS migrants in U.S. areas:

Migrants • While OIA’s 1998 census identified 92 Marshallese and their children living in the CNMI, a Marshallese migrant we met with in the CNMI in 2000 showed us a list of Marshallese families, which she explained totaled 260 persons. While there is a 2-year difference in the data, the population of RMI migrants is very stable, with few people coming or going in recent years, according to this Marshallese community representative. • One of the Marshallese migrants living in Hawaii who assisted with OIA’s 1997 survey of FAS migrants estimated that the survey missed around 15 percent of the Marshallese population living on the Hawaiian island of Oahu. • The OIA surveys report a smaller number of FAS students enrolled in public schools (kindergarten through grade 12) in each of the three U.S. areas than do the administrative data provided to us by each school district. An analysis of the data shows that: (1) in 1997, OIA counted only 1,205 ethnic FAS students in Guam, whereas Guam counted 3,009 ethnic FAS students;54 (2) in 1998, OIA counted only 422 FAS-born students in the CNMI, whereas the CNMI counted 575 FAS-born students; and (3) in 1997,

54 OIA has stated that Guam’s administrative data on student enrollment overcount the actual number of students enrolled in Guam schools because the Guam Department of Education double-counts students who enroll in more than one school during the school year. However, according to an official from Guam’s Department of Education, their enrollment data do reflect a single point in time (snapshot), which would indicate that these data are comparable to OIA’s enrollment data.

Page 41 GAO-02-40 Micronesian Migration Appendix II: FAS Migrant Population Data Collection

OIA counted only 1,054 FAS-born students in Hawaii, whereas Hawaii’s Department of Education counted 1,283 FAS-born students in their English as a Second Language program alone. • The possibility of an undercount on Guam is also illustrated by the discrepancies in the numbers of Palauans living on that island in 1997. An Ernst & Young report issued on the impact of Micronesian migration to Guam that compared the OIA 1997 survey with the 1995 census of Palauans on Guam, found 1,716 fewer Palauans in Guam in 1997 than in 1995 (dropping from 2,276 to 560 persons). Moreover, the report noted that confusion in the Palauan community as to why a survey was being conducted in 1997 (since a Palauan-only census was administered just 2 years prior in the form of the 1995 Census of Palauans on Guam) may have led to an undercount of Palauans on Guam in the OIA 1997 survey.

Page 42 GAO-02-40 Micronesian Migration Appendix III: Comments From the Appendix III: CommentsDepartment of the Interior From the Department of the Interior

Note: GAO comments supplementing those in the report text appear at the end of this appendix.

See comment 1.

See comment 2.

Page 43 GAO-02-40 Micronesian Migration Appendix III: Comments From the Department of the Interior

Page 44 GAO-02-40 Micronesian Migration Appendix III: Comments From the Department of the Interior

The following are GAO’s comments on the Department of the Interior’s letter dated September 7, 2001.

1. The report number has been changed from GAO-01-1028 to GAO-02-40.

2. We do not believe that it has become more difficult each year to measure the impact of Compact migration, and in fact may have become an easier task. For example, a Guam official told us that when the Compact was implemented, the territory could not quantify impact from available data; since that time, Guam agencies have collected the necessary data on FAS migrants. Further, the CNMI government has reported that it is now taking action to better review data in order to provide more specific information regarding FAS migrants and their use of public services. However, it is worth noting that over time the Department of the Interior will need to define the eligible Compact impact population as U.S.-born children of FAS migrants begin to have children of their own.

Page 45 GAO-02-40 Micronesian Migration Appendix IV: Comments From the Department Appendix IV: Commentsof State From the Department of State

Note: GAO comments supplementing those in the report text appear at the end of this appendix.

Page 46 GAO-02-40 Micronesian Migration Appendix IV: Comments From the Department of State

See comment 1.

Page 47 GAO-02-40 Micronesian Migration Appendix IV: Comments From the Department of State

See comment 2.

See comment 3.

Page 48 GAO-02-40 Micronesian Migration Appendix IV: Comments From the Department of State

The following are GAO’s comments on the Department of State’s letter dated August 22, 2001.

1. The report recognizes that machine-readable passports would facilitate entry of travelers, determinations of admissibility, and links to criminal databases. It is worth pointing out that criminals have been identified upon entry into the United States using other means. For example, the U.S. embassy in the RMI is providing the INS with a list of convicted RMI felons for determining admissibility at the port of entry.

2. This report examined Hawaii, Guam, and the CNMI because these destinations received the initial influx of Compact migrants, comprehensive surveys of these migrants had been conducted in each location, and impact compensation is authorized for each of the three locations. As acknowledged by the Department of State in its letter, we intend to undertake a review of migration to the mainland following publication of this report.

3. We maintain that our comments on p. 8 of the report are accurate: While FAS migrants are classified as nonimmigrants, their behavior is often like that of immigrants in that they can stay indefinitely in the United States with few restrictions. Further, the habitual residence restrictions cited in the Department of State letter only apply to Guam.

Page 49 GAO-02-40 Micronesian Migration Appendix V: Comments From the Government Appendix V: Commentsof the Federated States of FromMicronesia the Government of the Federated States of Micronesia

Note: GAO comments supplementing those in the report text appear at the end of this appendix.

See comment 1.

See comment 2. Now on p. 16.

Page 50 GAO-02-40 Micronesian Migration Appendix V: Comments From the Government of the Federated States of Micronesia

Now on p. 10.

See comment 3.

See comment 4.

See comment 5.

Page 51 GAO-02-40 Micronesian Migration Appendix V: Comments From the Government of the Federated States of Micronesia

See comment 6.

See comment 7.

See comment 8.

See comment 9.

See comment 10.

See comment 11.

Page 52 GAO-02-40 Micronesian Migration Appendix V: Comments From the Government of the Federated States of Micronesia

See comment 12.

See comment 13

Now on p. 22.

See comment 14.

Page 53 GAO-02-40 Micronesian Migration Appendix V: Comments From the Government of the Federated States of Micronesia

The following are GAO’s comments on the letter from the government of the Federated States of Micronesia dated August 31, 2001.

1. We agree that the Compact’s migration provisions strengthen ties between the United States and the FSM and the RMI. As we discussed on p. 8 of this report, at the time of the Compact negotiations, the Compact negotiator stated that the migration rights were to strengthen ties between the United States and the Freely Associated States (FAS). The current Compact negotiator has reiterated this point, referring to the migration rights not only as an important "safety valve" for the FAS population, but as the "glue" between the nations. The negotiator further stated that because the children of FAS migrants born in the United States are U.S. citizens, ties between the United States and the FAS are further deepened.

2. As we reported on p. 16 of this report, the governments of Guam, Hawaii, and the CNMI all acknowledge that FAS migrants have had positive impacts such as contributing to the tax base and filling employment needs. However, the Compact enabling legislation specifically requires reports only on the adverse impact of the Compact. As noted on p. 16 of this report, the CNMI's impact estimate for 1996 quantified $3.6 million in positive benefits from the taxes paid by FAS migrants, compared with their reported cost of $11 million that year. The Congress authorized compensation in the Compact's enabling legislation for U.S. island areas that may have experienced increased demands on their educational and social services by Compact migrants, but did not include compensation for other impact costs, such as infrastructure. Consequently, the U.S. island areas are not submitting claims for total costs in their impact estimates. In addition, available data on investment and savings reported by FAS migrants in Department of the Interior surveys show that few migrants invest and save. For example, of 2,053 Compact FSM households surveyed, only 15 reported any interest, dividend, or net rental income in 1997 in Guam and Hawaii or 1998 in the CNMI. Reviewing the impact of Compact expenditures on U.S. companies is not within the scope of this review.

3. We believe our description of the number of FAS migrants and the income levels of these households is neither damning nor inaccurate. Surveys have identified thousands--about 14,000--of Compact FAS migrants in Guam, Hawaii, and the CNMI. FAS migrants reported their income in surveys conducted in Guam, Hawaii, and the CNMI. In total,

Page 54 GAO-02-40 Micronesian Migration Appendix V: Comments From the Government of the Federated States of Micronesia

about 61 percent of FAS migrants lived in households with income levels below the poverty level, based on the U.S. poverty definition.

4. We do not suggest that FSM migrants “choose” to live in poverty, but report that their employment has been primarily in private sector jobs requiring few skills and paying low wages.

5. Our report does not contain data on the number of FAS migrants on the U.S. mainland. As reported on p. 11 of this report, according to OIA surveys, FAS migrants accounted for about 5 percent of Guam’s total population in 1997 and around 4 percent of the CNMI’s total population in 1998. These migrants accounted for 0.5 percent of Hawaii’s population in 1997. As noted on p. 11, we believe that these figures underestimated the number of FAS migrants in these three U.S. locations.

6. Issues regarding U.S. employer recruitment were not raised by island government officials or FAS migrants concerning Guam, Hawaii, or the CNMI. We recognize that FSM officials have raised this issue regarding U.S. mainland employers who are recruiting FSM citizens for work.

7. The number of FAS citizens who return to the islands after schooling or a period of employment is not known. The FSM and RMI governments were not able to provide such data, although one FSM government official estimated that perhaps one-fourth of migrants return.

8. When reporting on OIA migrant survey information, we identified the FSM, the RMI, and Palau separately where notable data differences existed. For example, see table 1 on p. 11 and table 2 on p. 14. With respect to Compact impact estimates, we relied upon data provided to us by Guam, Hawaii, and the CNMI. These data often combined all FAS migrants, making it impossible for us to report on the impact of the three FAS nations separately. Guam, Hawaii, and the CNMI are eligible to receive Compact impact compensation for the impact of migrants from all three FAS nations.

9. The issue of FAS citizens who enlisted in the U.S. armed forces will be addressed in a separate GAO report on Compact defense and security issues. This report will be issued before the end of 2001.

10. As we reported on p. 13, the pursuit of educational opportunities was one of the motivations for migration, according to migrants and FAS

Page 55 GAO-02-40 Micronesian Migration Appendix V: Comments From the Government of the Federated States of Micronesia

government officials. OIA migrant surveys for Guam, Hawaii, and the CNMI did not ask FAS migrants whether education was a reason for migration, and thus contain no data on this issue.

11. The report’s recommendation was not drafted with the intent to end migration. The recommendation has two purposes. In addition to providing an option that could reduce some of the incentives to migrate, the recommendation also recognizes that improvements in the health and education systems in FAS nations could reduce the impact of migration on the receiving areas.

12. Consideration of alternatives available to the U.S. government to increase opportunities and improve conditions in FAS nations was beyond the scope of this report.

13. Our report does not contend that FAS migrants have introduced (i.e., provided the first case of) any communicable disease into the United States. However, Hawaii has repeatedly emphasized public health concerns regarding FAS migrants. According to a report prepared by Hawaii’s Department of Health and included in Hawaii’s January 31, 2001 Compact impact report, the FSM has the highest prevalence of Hansen’s Disease (leprosy) in the world, at 35 cases per 10,000 people. For 1992 through 1999, 151 cases of this disease were detected among the Marshall Islanders and Micronesians in Hawaii. Hawaii also identified cases of tuberculosis, pertussis, and hepatitis A occurring within the FAS population communities in the state. In addition, Guam and CNMI health officials also raised public health concerns regarding FAS migrants.

14. We believe this report is objective and fair. It reports on the migration experience under the Compact of Free Association relying on the best available data.

Page 56 GAO-02-40 Micronesian Migration Appendix VI: Comments From the Government of the Republic of the Marshall Appendix VI: CommentsIslands From the Government of the Republic of the Marshall Islands

Note: GAO comments supplementing those in the report text appear at the end of this appendix.

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See comment 1.

See comment 2.

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See comment 3.

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See comment 4.

See comment 5.

See comment 6.

See comment 7.

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See comment 8.

See comment 9.

See comment 10.

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The following are GAO’s comments on the letter from the government of the Republic of the Marshall Islands dated September 4, 2001.

1. This GAO report is one in a series of reviews of U.S. relations with the FSM and the RMI under the Compact of Free Association. Previously, we have published an assessment of the use, effectiveness, and accountability of U.S. Compact economic assistance. In addition to this migration report, forthcoming reviews cover the use, effectiveness, and accountability of U.S. domestic programs extended to both nations, as well as defense and security relations. Taken together, these reports will illustrate the larger context of the free association relationship between the three countries.

2. The determination of poverty levels is based on the U.S. nationwide standard as established by the U.S. Bureau of the Census. These levels are adjusted annually for family size. The measure of poverty is required for statistical purposes by the U.S. Office of Management and Budget in Statistical Policy Directive No. 14. We have added a footnote on p. 14, stating that poverty levels are based on the single U.S. standard discussed previously.

Regarding education, our report does not state that FAS migrants are “uneducated.” Instead, we report that migrants have not been highly educated, based on OIA migrant survey data. According to U.S., Guam, and CNMI government reports, FAS migrants have lower educational levels than the overall population in Guam, Hawaii, and the CNMI. For example, 55 percent of Compact migrants over the age of 25 had high school degrees in Hawaii in 1997, while 84 percent of the total Hawaiian population over the age of 25 had a high school degree.

3. We have added text on p. 23 to state that the RMI government does not have an official policy regarding migration.

4. We have modified the title of the report in recognition that “foreign relations” is a more appropriate way to classify the migration relationship between the United States and FAS nations. We continue to believe that the Compact economic and program assistance is most accurately referred to as “foreign assistance.”

5. We made the suggested change.

6. We made the suggested footnote change.

Page 69 GAO-02-40 Micronesian Migration Appendix VI: Comments From the Government of the Republic of the Marshall Islands

7. We made the suggested footnote change.

8. We did not make this change. The report states that migration is viewed as a “safety valve” by government officials; it does not state that this view constitutes a matter of official government policy.

9. While we did not alter this particular sentence, on p. 14 of the report we added text to note that, in Hawaii, a higher percentage of Compact RMI migrants reported that they migrated to Hawaii for medical reasons (10 percent) than reported moving for employment (7 percent). However, we note that 43 percent of Compact Marshallese surveyed chose “other” as their reason for migrating.

10. We have made some of the suggested changes.

Page 70 GAO-02-40 Micronesian Migration Appendix VII: Comments From the Appendix VII: CommentsGovernment of Guam From the Government of Guam

Note: GAO comments supplementing those in the report text appear at the end of this appendix.

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See comment 1.

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See comment 2.

See comment 3.

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See comment 4.

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See comment 5.

See comment 6.

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See comment 2.

Page 76 GAO-02-40 Micronesian Migration Appendix VII: Comments From the Government of Guam

The following are GAO’s comments on the letter from the government of Guam dated August 30, 2001.

1. The data we present on p. 17 of the report regarding the impact of FAS migrants on Guam, Hawaii, and the CNMI include public safety costs. We acknowledge that FAS migrants create impact on the criminal justice system in Guam. For example, in Guam, where FAS migrants make up about 5 percent of the population, 12 percent of the cost of the corrections system was attributed to FAS migrants in fiscal year 2000. FAS migrants represented 26 percent of all convictions in fiscal year 1999/2000 in Guam. We did not separately discuss this area of impact in our report because it is smaller than the impact reported on the health and education systems. For example, for fiscal year 2000 public safety costs estimated by Guam was 6 percent of the total impact amount, compared with 54 percent for education and 40 percent for health and welfare.

Reviewing the impact immigration to Guam from countries other than FAS nations was beyond the scope of this report.

2. The issues of economic development and employment opportunities in the FSM and the RMI have been addressed in a prior GAO report. In this review, we reported that the considerable funds provided to the FSM and the RMI under the Compact had resulted in little economic development. See Foreign Assistance: U.S. Funds to Two Micronesian Nations Had Little Impact on Economic Development (GAO/NSIAD-00-216, Sept. 22, 2000). We have not assessed the extent to which long-term stability in FAS nations can be created in the future through economic development and employment opportunities.

3. We maintain that the report’s recommendation provides an option that could reduce some of the incentives to migrate. For example, targeted investments for dialysis treatments would allow some FAS citizens to remain at home instead of moving to U.S. locations. Further, the recommendation also recognizes that improvements in the health and education systems in FAS nations could reduce the impact of migration on the receiving areas. For example, improved immunization in FAS nations could reduce the public health concerns currently voiced by Guam, Hawaii, and the CNMI with regard to FAS migrants.

4. OIA migrant survey data have shown that employment has been a key reason for FAS migration to Guam, Hawaii, and the CNMI since the

Page 77 GAO-02-40 Micronesian Migration Appendix VII: Comments From the Government of Guam

Compacts were implemented. However, we noted on p. 15 of our report that “…Guam government officials told us that as Guam’s unemployment rate has reached about 15 percent in recent years, the demand for FAS workers may have decreased.” This development does not necessarily mean, however, that Guam is now viewed in FAS nations as a location without employment opportunities. For example, an elected Guam official pointed out to us that as difficult as the employment situation may be in Guam, conditions are worse in the FSM state of Chuuk (the poorest state in the FSM and the birthplace of the largest group of FAS migrants in Guam).

5. As Guam rightly states in its comments, our report does not address how the two options available in the Compact and its enabling legislation should be used to address the impact caused by the migration from FAS. As our report points out, however, the Compact’s enabling legislation does not require compensation for impact costs. Rather, it says that the Congress will act “sympathetically and expeditiously” to redress adverse consequences. As such, it is at the Congress’ discretion to compensate for Compact impacts. Similarly, since the INS recently instituted regulations on habitual residents in the territories, we felt it was premature to recommend further regulations until the results of the new regulations can be assessed.

6. We added language on p. 25 of this report noting that the Guam government believes that restricting the use of compensation funding to capital improvement projects does not target the money where it could be best used.

Page 78 GAO-02-40 Micronesian Migration Appendix VIII: Comments From the Appendix VIII: CommentsGovernment of Hawaii From the Government of Hawaii

Note: GAO comments supplementing those in the report text appear at the end of this appendix.

See comment 1.

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See comment 2.

See comment 3.

See comment 4.

See comment 4.

See comment 5.

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See comment 6.

See comment 7.

See comment 8.

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See comment 9.

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The following are GAO’s comments on the letter from the government of the State of Hawaii dated August 31, 2001.

1. We recognize in our report that FAS migrant eligibility for Medicaid is an important issue for the state of Hawaii. As Hawaii noted in its letter, the Congress recently reinstated FAS citizen eligibility for federal housing programs; a similar reinstatement of eligibility for federal Medicaid benefits would require a congressional policy decision.

2. We have not undertaken an analysis to determine whether there might be sufficient potential Compact health sector funds to pay FAS debts to U.S. health care facilities or what the impact of such payments would be on the FAS health care systems.

3. We have discussed the possibility of requiring health screenings with Department of State officials. They informed us that such screenings are not feasible, as the Department does not have sufficient resources to administer such a system in FAS countries. Further, INS officials noted that requiring such screenings would be unfair treatment against FAS migrants, as nonimmigrants are not required to undergo health screenings. While we recognize that requiring health screenings would address a key concern for all three U.S. locations, we believe that the likelihood of the U.S. government implementing such a recommendation is low.

4. Financial compensation is not required under the Compact or its enabling legislation, but can be made at the discretion of the Congress.

5. While we agree that Hawaii has developed its own methodology for calculating impact, we note that Hawaii officials have told us that the state’s Department of Education includes pre-1986 migrants in its Compact impact estimates.

6. On p. 1 of our report, we have better highlighted the fact that Hawaii is a state with a different status than Guam and the CNMI. We then explain in a footnote that we chose the term “U.S. island areas” to refer collectively to a U.S. state, a U.S. territory, and a U.S. commonwealth. We view this term as a neutral, concise reference to the three locations. Further, we list “Guam, Hawaii, and the CNMI” in descending order based upon the number of FAS Compact migrants each location has received.

Page 98 GAO-02-40 Micronesian Migration Appendix VIII: Comments From the Government of Hawaii

7. We have retained the footnote as is. We do not believe that Interior’s recalculation of Compact impact estimates for 1 year out of 15 merits inclusion in the body of the report. Further, we are not convinced that OIA’s approach to adjusting the data was valid.

8. We have modified the text to note that Hawaii has estimated $86 million in Compact impact costs, but has received no compensation to date.

9. We agree, and have recommended in a previous report that future Compact economic assistance include specific measures (including grant requirements) that will ensure the effectiveness of, and accountability over, future spending. See Foreign Assistance: U.S. Funds to Two Micronesian Nations Had Little Impact on Economic Development (GAO/NSIAD-00-216, Sept. 22, 2000).

Page 99 GAO-02-40 Micronesian Migration Appendix IX: Comments From the Government of the Commonwealth of the Appendix IX: CommentsNorthern Mariana Islands From the Government of the Commonwealth of the Northern Mariana Islands

Note: GAO comments supplementing those in the report text appear at the end of this appendix.

Now on p. 29.

Now on p. 15, footnote 21.

Page 100 GAO-02-40 Micronesian Migration Appendix IX: Comments From the Government of the Commonwealth of the Northern Mariana Islands

See comment 1.

Now on p. 19, footnotes 29 and 30. See comment 2.

See comment 3.

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See comment 4.

Page 102 GAO-02-40 Micronesian Migration The following are GAO’s comments on the letter from the government of the Commonwealth of the Northern Mariana Islands dated August 29, 2001.

1. We added text in footnote 21 on p. 15, stating: “Further, CNMI government officials have reported that it is far more cost effective to hire a FAS citizen, given the immigration filing expenses and other costs associated with hiring other foreign workers.”

2. The report does not suggest that FAS migrant health costs are unimportant in the CNMI. In fact, on p. 18, we noted that health costs were the greatest impact for the CNMI in 2000.

3. We added language on p. 25 of the report, noting that the CNMI government believes that restricting the use of compensation funding to capital improvement projects does not target the money where it could be best used.

4. The issues of economic development and employment opportunities in the FSM and the RMI have been addressed in a prior GAO report. In this review, we reported that the considerable funds provided to the FSM and the RMI under the Compact had resulted in little economic development. See Foreign Assistance: U.S. Funds to Two Micronesian Nations Had Little Impact on Economic Development (GAO/NSIAD-00-216, Sept. 22, 2000). We have not assessed the extent to which long-term stability in FAS nations can be created in the future through economic development and employment opportunities.

Page 103 GAO-02-40 Micronesian Migration Appendix X: GAO Contacts and Staff Acknowledgments

GAO Contacts Emil Friberg (202) 512-8990 Leslie Holen (415) 904-2277

Acknowledgments In addition to those named above, Tama Weinberg, Ron Schwenn, Mary Moutsos, and Rona H. Mendelsohn made key contributions to this report.

(320001) Page 104 GAO-02-40 Micronesian Migration GAO’s Mission The General Accounting Office, the investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability.

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